Law of the Sea. Particular Aspects Affecting the Petroleum Industry May 1973

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3 Law of the Sea Particular Aspects Affecting the Petroleum Industry May 1973 Prepared by The National Petroleum Council's Committee on Petroleum Resources Under the Ocean Floor Wilton.E. Scott, Chairman with the assistance of The Technical Subcommittee on Petroleum Resources Under the Ocean Floor Dr. Hollis D. Hedberg, Chairman

4 NATIONAL PETROLEUM COUNCIL H. A. True, Jr., Chairman Robert G. Dunlop, Vice-Chairman Vincent M. Brown, Executive Director Industry Advisory Council to the U.S. DEPARTMENT OF THE INTERIOR Rogers C. B. Morton, Secretary Stephen A. Wakefield, Assistant Secretary for Energy and Minerals Duke R. Ligon, Director, U.S. Office of Oil and Gas Cover photo: 250,000 DWT tanker, Esso Scotia Courtesy Exxon Corporation

5 PREFACE The National Petroleum Council, an industry advisory body representing virtually all sections of the U.S. oil and gas industries, was established by the Secretary of the Interior on June 18, 1946, pursuant to a directive of the President of the United States. The purpose of the Council is to advise, inform and make recommendations to the Secretary of the Interior with respect to matters relating to petroleum or the petroleum industry submitted to it by the Secretary. On September 15, 1972, the Council was requested by the Department of the Interior to undertake this study, Law of the Sea-Particular Aspects Affecting the Petroleum Industry. The NPC's Agenda Committee unanimously recommended that the study be undertaken and it was referred to the existing NPC Committee on Petroleum Resources Under the Ocean Floor, chaired by Wilton E. Scott, Chairman of the Board, Tenneco Oil Company. The Committee is assisted by a Technical Subcommittee, headed by Dr. Hollis D. Hedberg, Exploration Advisor, Gulf Oil Corporation, and a Legal Task Force, chaired by Cecil J. Olmstead, Vice President, Texaco Inc. (A complete listing of members may be found in Appendix B.) The report is the third in a series which has been completed by the Council regarding oil and gas development on the continental margins in respect to international negotiations being conducted by the United Nations Seabed Committee preparing for the forthcoming Conference on the Law of the Sea. This report expresses the consensus of the membership of the National Petroleum Council. Association of representatives of the Department of the Interior and other government agencies with the deliberations of the Council on this subject does not connote endorsement of the recommendations expressed by the Council in this report. The National Petroleum Council recognizes that the military establishment is highly dependent upon adequate petroleum supplies for its mobility, but beyond that aspect, has excluded from this report any discussion of military implications of ocean area uses. The views expressed in the report are those of the Council and do n,ot necessarily reflect the views of the Department of the Interior or of the United States Government.

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7 TABLE OF CONTENTS Introduction A. The Study Assignment nm B. Background nm_h._h_u_h_mm C. Earlier NPC Reports m D. WorId Energy Outlook n m n mmn _m n 1 h_uuu_u_m m u uh m _ m_ 2 h u h_mh_h m_m u 3 E. Recent United Nations Developments mum mh m_u_. u_m h nm. 3 Chapter One International Community Interest in Navigation m_u A. Background m 1 mhu_ 5 9 m u muum um mu m 9 B. Interest of States in Unimpeded Commercial Navigation u uuu m m u m_n n_mu mm m 10 C. Existing International Law Relating to Navigation 13 D. Conclusions and Recommendations m m_m 13 Chapter Two International Community Interest in Stable Investment Conditions mh nm u_hh m h 17 A. Area of Coastal State Resource Jurisdiction m 17 B. Area Beyond Coastal State Resource Jurisdiction 22 C. Conclusions and Recommendations _h_uhhu m n _ 22 Chapter Three Protection of the Marine Environment m A. Sources of Marine Oil Pollution m mmm hn_m 25 mh_u m m 25 B. Interests to be Accommodated by Pollution Control Standards m_m_m mu nm m_n 28 C. Types of Pollution Control Standards m D. Jurisdictional Considerations _m E. Conclusions and Recommendations h m_m 31 u n h _mhmmm 32 _m_m muu 32

8 Chapter Four Accommodation of Uses m hnn m m mh nnnn 35 A. Complexity of Multiple Use of the Marine Environment mm m n nnm n_m m_n_mnm mn nn 35 B. Recommendations m Chapter Five Settlement of Disputes m Appendices m nn n_.m---n---n m---_-m 36 m m m_hhnhhn _mh_h_ m hm_m 37 A. Law of the Sea Convention Facilities nhmm n 37 B. Disputes Between States and with International Organizations _n nn m mn m nn_mm h nn 38 C. Disputes Involving Private Parties n D. Conclusions and Recommendations m n nnm_n _ mm_ 39 m h nm 39 A. Letter of September 15, 1972, from the Assistant Secretary of the Interior-Mineral Resources, Mr. Hollis M. Dole, to Mr. H. A. True, Jr., Chairman of the National Petroleum Council _hh nh 41 B. Listing of Committees and Members mmnn_nn nm_md_n h m 43 C. Statement to U.N. Committee on the Peaceful Uses of the Seabed and the Ocean Floor Beyond the Limits of National Jurisdiction, Plenary Session, by Mr. John R. Stevenson, August 10, 1972 nnn_ n n nnnnn n_hhn n h h_nn n n n nnn n nn 47 D. List of Subjects and Issues Relating to the Law of the Sea Developed by the U.N. Seabed Committee _m mnmnmnn_mm 53 E. General Principles for Assessment and Control of Marine Pollution Endorsed by the U.N. Conference on the Human Environment On n_hh n h n n hh_h_h n_hh hh_ h n nn_h h h n 57 F. Straits Used by Tankers and Alternate Routes nnmmm G. Review of Existing Law Relating to Navigation nnmn nmhnm n h mn 61 m 77 H. Scope of the Activities of the Intergovernmental Maritime Consultative Organization mnnnmnnd nm_ n_m m_n_m nhm h_m Extract from Statement by Mr. John R. Stevenson to Subcommittee III of U.N. Seabed Committee, August 2, 1972 _mh m_m 89

9 INTRODUCTION A. The Study Assignment Following two earlier requests from the Department of the Interior regarding oil and gas development on the continental margins, Assistant Secretary Hollis M. Dole, by letter of September 15, 1972, addressed to Mr. H. A. True, Jr., Chairman of the National Petroleum Council, requested the Council to undertake a further study and to report on matters relating to the Law of the Sea, including seabed mineral resources. * In his letter, Mr. Dole writes: In order to assist the Department of the Interior in the continuing preparation for the scheduled 1973 Law of the Sea Conference, the National Petroleum Council is requested to prepare a further study which should consider the question of navigation in coastal waters and international straits and the question of security of investment in overseas and domestic offshore areas. In conjunction with the latter, it would be helpful if special attention could be paid to the issue of compulsory settlement of disputes. The letter refers to the projected increasing dependence of the United States on imported petroleum and the need to reduce that dependence as well as to * The letter is attached as Appendix A. stabilize the conditions under which petroleum will be produced abroad and exported to the United States. In his letter, Mr. Dole points out that: In this connection, the U.S. Representative to the United Nations Seabeds Committee on August 10, 1972, advised the United Nations that it is essential that Coastal State jurisdiction over mineral resources of the continental margins be subject to international standards, including navigation in coastal areas, pollution prevention, protection for the integrity of investments and the compulsory settlement of disputes. The remarks of Mr. John R. Stevenson, U.S. Representative to the United Nations Seabed Committee, made in the Plenary Session of this Committee on August 10, 1972, included the following: t In order to achieve agreement, we are prepared to agree to broad Coastal State economic jurisdiction in adjacent waters and seabed areas beyond the territorial sea as part of an overall Law of the Sea settlement. However, the jurisdiction of the Coastal State to manage the resources in these areas must be tempered by international standards which will offer reasonable t See Appendix C for complete text of Mr. Stevenson's statement. 1

10 prospects that the interests of other States and the international community will be protected. With regard to international treaty standardst he went on to say: When a Coastal State permits foreign nationals to make investments in areas under its resource management jurisdictiont the integrity of such investments should be protected by the treaty. Security of tenure and a stable investment climate should attract foreign investment and technology to areas managed by developing Coastal States. Without such protection in the treaty, investment may well go elsewhere. He also urged compulsory settlement of disputes arising from ocean uses as follows: International standards such as those I described are necessary to protect certain noncoastal and international interests, and thus render agreement possible. AccordinglYt effective assurances that the standards will be observed is a key element in achieving agreement. Adequate assurance can only be provided by an impartial procedure for the settlement of disputes. These disputest in the view of my delegation, must be settled ultimately by the decision of a third party. For us then the principle of compulsory dispute settlement is essential. Because a Conference on the Law of the Sea offers an opportunity to stabilize factors relating to the productiont transport and consumption of petroleum-factors essential to providing for worldwide energy needs-the Council has approached this assignment with the sense of obligation and urgency required by the significance of the subject matter. B. Background As was emphasized by President Nixon in his statement of May 23 t 1970t on U.S. Oceans PolicYt nations are facing issues of momentous importance respecting uses of the oceans. The decisions that nations make in the coming Law of the Sea Conference will affect the global economy and international security for decades to come. Since 1967, the United Nations has been concerned with the subject of peaceful uses of the seabed and the ocean floor beyond the limits of national jurisdiction as well as other related issues. By 1970t its consideration of the subject had reached a stage which prompted the General Assembly to decide to convene a Conference on the Law of the Sea in Resolution 2750 (XXV) adopted by the General Assembly for that purpose specified that the Conference will considerinternational machinery-for the area and resources of the seabed and the ocean floor, and the subsoil thereot beyond limits of national jurisdictiont a precise definition of the areat and a broad range of related issues including those concerning the regimes of the high seast the continental shelt and territorial sea (including the question of its breadth and the question of international straits) and contiguous zonet fishingt and conservation of the living resources of the high seas (including the question of preferential rights of Coastal States), the preservation of the marine environment (includingt inter alia t the prevention of pollution)t and scientific research. The preparatory work for the Conference is assigned to a 91-member Committee on the Peaceful Uses of the Seabed and Ocean Floor Beyond the Limits of National Jurisdiction. 2

11 A Conference and Convention on the Law of the Sea covering the broad range of topics envisaged must surely have a marked influence upon the offshore exploration, production and transportation operations of the petroleum industry. These petroleum industry operations have an important impact on the economy and well-being of the United States and, indeed, of all nations. A Law of the Sea Conference will provide a distinct opportunity for achieving results to help solve the energy problems faced by highly industrialized consumer countries and to assist further the economic growth of the less developed countries. C. Earlier NPC Reports At the request of the Department of the Interior, the NPC's initial study respecting seabed matters was undertaken in 1968 and completed in * This Report provided a comprehensive analysis of the complex problems involved in the exploration and development of oil and gas resources from beneath the ocean floor, with careful consideration of U.S. national energy policy objectives and of geological, technological, economic, legal and multiple-use aspects. In this Report the NPC concluded, among other things, that existing international law, conventional and general, recognized the jurisdiction of Coastal States over the exploration for and development of the mineral resources of the entire continental margin off their coasts. In response to a further request by the Department of the Interior in August 1970, the NPC prepared a supplemental study to the 1969 Report analyzing and commenting upon a proposed U.N. Convention on the International Seabed Area presented by the U.S. Government as a working paper on August 3, 1970, at the summer session of the U.N. Seabed Com- * NPC, Petroleum Resources Under the Ocean Floor (March 1969). mittee in Geneva, Switzerland.t In this Report, the Council endorsed the following five principles enunciated in the President's Statement of May 23, 1970, on U.S. Oceans Policy regarding the exploitation of seabed resources: [1] the collection of substantial mineral royalties to be used for international community purposes, particularly economic assistance to developing countries... [and the establishment of] general rules, [2] to prevent unreasonable interference with other uses of the ocean, [3] to protect the ocean from pollution, [4] to assure the integrity of the investment necessary for such exploration, and [5] to provide for peaceful and compulsory settlement of disputes. This NPC Report recommended that the United States and other Coastal States retain jurisdiction over the mineral resources of the continental margins off their coasts and not relinquish such jurisdiction to an international organization and the Council reaffirms that recommendation. D. World Energy Outlook The particular significance to the petroleum industry of matters relating to the Law of the Sea, including seabed oil and gas development, is emphasized by the rapidly growing worldwide need for energy and the fact that much of the world's petroleum supply must necessarily be transported by ocean tanker from producing to consuming countries. The efforts of all countries to improve their standards of living have sharply increased the demand for energy, particularly that supplied by petroleum. This increase in demand will be especially true of the developing countries. It is projected that, for the foreseeable future, t NPC, Petroleum Resources Under the Ocean Floor-Supplemental Report (March 1971). 3

12 increases in energy needs for developed countries may increase at a rate of about 5 percent annually. In the developing countries, which account for about 70 percent of the world's population, the yearly rate of increase will be far higher. The National Petroleum Council, in its recent study, U.S. Energy Outlook, estimated that total Free World demand for liquid hydrocarbons will more than double from 40 million barrels per day (MMB/D) in 1970 to almost 88 MMB/D by 1985.* Close to 70 percent of this oil will be transported on the world's oceans. International oil supply patterns will be influenced by many factors, including 0) the geographical distribution of oil reserves, (2) political and economic conditions, (3) the rate and ultimate amount of reserve additions, (4) price competition, (5) quality and relative refining values of alternative crude supplies, (6) security considerations, (7) the need for diversified energy and crude sources, (8) changes in geographic patterns of demand, (9) environmental considerations, and (0) the rate of development of alternative energy sources and technology. Taking these factors into account, the National Petroleum Council, in its U.S. Energy Outlook Report, concluded that: Existing reserves coupled with the non-communist World resource base remaining to be discovered, as it is presently appraised, are sufficient to meet requirements up to Assuming that political and economic conditions throughout the non-communist World will continue to provide rewarding investment opportunities, it is well within the geological and technical capability of the international oil in- * NPC, U.S. Energy Outlook, A Report of the National Petroleum Council's Committee on U.S. Energy Outlook (December 1972 ), Chapter Twelve, Table 154. dustry to add in the range of 450 to 550 billion barrels of oil to proved non-communist World crude oil reserves during the 15 year period Any events or conditions that adversely affect the political or economic climate will have a negative impact on future oil finding and development. Finding and developing this range of gross additions to proved non Communist World crude oil reserves in the period through 1985 will depend, to a large extent, on the oil industry's ability to attract or generate large amounts of capital. This situation will be complicated by a variety of uncertainties in both domestic and foreign government energy policies with regard to increased taxation, nationalistic foreign government policies and actions, and the ultimate impact of current demands for participation in oil operations by governments of foreign producing countries. Also, restraints on capital recovery and possible future currency exchange adjustments may add to the already large risks and adversely affect long-term profitability and, ultimately, the oil industry's ability to provide the required supplies during this period. The cost of finding, developing and supplying the volume of oil required through 1985 will likely increase sharply over the intervening years. There is not an endless supply of so-called "low cost" oil -even in the Middle East. New increments of crude oil producing capacity will be more and more costly as much of the new producing capacity will have to come from offshore and Arctic regions. New supplies from these areas will be more expensive than existing reserves because of the high costs 4

13 associated with exploring and producing oil in these harsh environments and with meeting their more stringent environmental standards. Even in Middle East countries, future new production will likely come from smaller, less productive -and therefore higher cost-reserves than those now supplying much of the present production. * Developed and developing countries, consuming and producing countries, and the international oil industry that serves all countries have differing interests with regard to petroleum. In the face of accelerating demand for petroleum, however, the common interest in the discovery, development and transport of these resources far outweighs any differences that might lie between them. E. Recent United Nations Developments The U.N. Seabed Committee, perhaps more properly referred to as a preparatory committee for the U.N. Law of the Sea Conference, continued its work by holding two sessions in 1972, the first in New York in March and the second in Geneva in July and August. The most noteworthy accomplishment of these sessions was an agreement on a list of subjects and issues to form the basis of an agenda for the Law of the Sea Conference. t Review of this list shows that matters referred to in Secretary Dole's request letter are included in the proposed Conference agenda. Another accomplishment was the establishment of a working group on the international regime, composed of 33 members, to prepare draft treaty articles giving effect to the Declaration of Principles adopted by General Assembly Resolution 2749 (XXV) in These principles, expressed in general terms, * U.S. Energy Outlook, pp l. t See Appendix D, "List of Subjects and Issues Relating to the Law of the Sea." were accepted without a single dissenting vote. However, the fact that they embraced fundamental issues on which governments hold widely divergent views became evident when the working group undertook to translate them into draft treaty articles. This work, which is still in a preliminary stage, was generally considered useful and indicative of some progress in that it clarified positions and identified differences. It also evidenced a genuine desire on the part of delegations to come to grips with fundamental issues in a constructive manner and to begin effective preparation for a Law of the Sea Conference. The General Assembly, at its 27th session in 1972, reviewed the work of the Seabed Committee and requested it to hold two further sessions in 1973 with a view to completing its preparatory work for the Law of the Sea Conference. By Resolution 3029 A (XXVII), the Assembly requested the Secretary General to convene the first session of the Law of the Sea Conference in New York for a period of approximately 2 weeks in November/ December This first session is to be limited to organizational matters such as the structure of the Conference, election of officers and adoption of an agenda. The Resolution calls for the second session of the Conference to deal with substantive work, to be held at Santiago, Chile, in April/May At its 28th session in 1973, the General Assembly will again review the progress of preparatory work for the Conference and will consider any further matters requiring decision in connection with the Conference.+ At its 27th (972) session, the General Assembly also took important actions on the recommendations of the Stockholm Conference on the Human Environment and other related matters. It established by Resolution 2997 (XXVII) the following: 0) a Governing Council for Environmental Programs to report annually to +U.N. Doc. A/PV.2114 (December 18, 1972), p

14 the General Assembly through the Economic and Social Council, (2) an environment secretariat headed by an Executive Director, and (3) a voluntary environment fund. * An Action Plan consisting of 109 recommendations was referred to the Governing Council for appropriate action through Resolution 2994 (XXVIl), in which governments were also reminded of those recommendations requiring action at the national level.t Nine recommendations of the Action Plan dealt specifically with marine pollution, one of the subjects of this Report. RecomrLendation 92 on marine pollution states in part: That Governments collectively endorse the principles set forth in paragraph 197 of Conference document A/CONF.48/8 t as guiding concepts for the Conference on the Law of the Sea and the Inter-Governmental Maritime Consultative Organization (IMCO) Marine Pollution Conference scheduled to be held in 1973 and also the statement of objectives agreed on at the second session of the Intergovernmental Working Group on Marine Pollution which reads as follows: The marine environment and all the living organisms which it supports are of vital importance to humanity, and all people have an interest in assuring that this environment is so managed that its quality and resources are not impaired. This applies especially to coastal area resources. The capacity of the sea to assimilate wastes and render them harmless and its ability to regenerate natural resources are not unlimited. * U.N. Doc. A/PV.2112 (December 15, 1972), p.8. t U.N. Doc. A/ PV.2112, p. 6. t See Appendix E, "General Principles for Assessment and Control of Marine Pollution." Proper management is required and measures to prevent and control marine pollution must be regarded as an essential element in this management of the oceans and seas and their natural resources. That Governments take early action to adopt effective national measures for the control of all significant sources of marine pollution, including land-based sources, and concert and co-ordinate their actions regionally and where appropriate on a wider international basis... It remains to be determined how effectively the new U.N. Governing Council for Environmental Programs and the environment secretariat will coordinate its functions and work with that of the U.N. Seabed Committee and any organization that may be established by the Law of the Sea Convention. In March and April of 1973, the Seabed Committee held its third preparatory session in New York. In Subcommittee 1, the United States put forward a major new proposal that would bring into effect on a provisional basis, pending the entry into force of the Law of the Sea treaty, those parts of the permanent international regime and machinery relating to seabed development. The Committee approved a request made by the U.S. for a study by the U.N. Secretary-General of examples of past precedents for such action. Early and tentative reactions of other delegations were mostly favorable. Subcommittee 1's Working Group on the International Regime and Machinery completed its second reading of the draft treaty articles concerning general principles of the legal regime and began consideration of the first draft articles relating to the new international seabed authority to be established. Subcommittee II, which deals with such questions as the economic resource zone, established a working group of the 6

15 whole and began a more refined debate on such issues as the territorial sea, straits and fisheries. In Subcommittee III, the United States presented a working paper to the Marine Pollution Working Group explaining the sources of pollution from vessels and urging exclusively international, rather than Coastal State, standards for marine pollution control. In addition, the Subcommittee established a new working group on scientific research and technology transfer that will begin its work during the 1973 summer session in Geneva. 7

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17 CHAPTER ONE INTERNATIONAL COMMUNITY INTEREST IN NAVIGATION A. Background Questions relating to navigation throughout the world's oceans are complex. They are made even more complex by the probability that negotiations leading to their resolution in a Law of the Sea Convention will be inextricably involved in other critical matters. These questions include the extent and quality of Coastal State jurisdiction respecting areas adjacent to its coasts, the nature of an international regime to regulate seabed resource development in the areas seaward of such jurisdiction and the security interests of States. It is of vital importance that an accommodation of differing national interests among States in navigational questions be achieved. As the U.S. Representative to the U.N. Seabed Committee has emphasized, "The freedoms of navigation... connect us as a single community; they embody our rights and interests in communicating with each other." * While it is now evident that some revision of international law regarding navigational rights is likely, it is essential that there be wide international agreement on such a revision. * Statement presented to Subcommittee II of the U.N. Seabed Committee by Mr. John R. Stevenson on August 3, Issues such as agreement on the nature and extent of a Coastal State's jurisdiction over seabed resources and the nature and extent of rights of passage through coastal waters and international straits are inseparable. Thus, wide agreement on international provisions governing such critical matters will be essential since all States are interested in and concerned with ocean use. Coastal State jurisdiction in the area off its coasts in which it exercises agreed rights should be appropriately limited, so that vessels engaged in commercial navigation passing through the area will be unimpeded except for internationally agreed provisions relating to safety of operation, including ship design and construction, pollution control and compliance with internationally agreed standards for the accommodation of such navigation with other lawful uses of the marine area. Failure to reach broad international agreement on these matters could well result in extensive claims of jurisdiction by some Coastal States which would seriously impair the rights and legitimate interests of all States. Questions of navigational rights have been made even more pressing with the assertion of the "archipelagic" doctrine. Under this doctrine, waters between even widely separated islands constituting an 9

18 archipelago are asserted to be either "internal" or "territorial" and, as such, subject to the jurisdiction of the Coastal State, thus further reducing or potentially eliminating the navigational rights of the international community. Another way of attempting unilaterally to extend the jurisdiction of a Coastal State over navigation, referred to by the Canadian Delegate to the U.N. Seabed Committee as "functional jurisdiction," is the attempted exercise of Coastal State authority over defined activities taking place beyond the territorial sea. Such exercise of Coastal State jurisdiction has been frequently undertaken with respect to national defense and security, the protection of fishing interests, and pollution control. The exercise of such jurisdiction has already led to serious impairment of navigation. If this trend were to continue, it would create a "clear and present danger" of seriously conflicting rules among various Coastal States which maritime interests would find practically impossible to comply with because of the diversity of these rules. If the international community cannot resolve its differences through internationally agreed standards, it seems certain that Coastal States will increasingly resort to inconsistent and irreconcilable unilateral actions. The danger of such unilateral actions is then very real -the consequences of failure to achieve internationally agreed standards are obvious, and the need for agreement is compelling. The new Law of the Sea Conference should recognize fully, however, that Coastal States have important interests in matters involving the use of the marine environment, especially the waters and seabeds off their coasts. These interests should be defined and international rules developed which would afford them protection without hampering navigation in the area. B. Interest of States in Unimpeded Commercial Navigation All States have a vital interest in unimpeded commercial navigation on the world's ocec;ms. Every exporting and importing State is, and will remain, heavily dependent upon seaborne trade. Petroleum tankers represent 45 percent of the total tonnage in international commerce on the world's oceans. The growing dependence of nations upon energy for the well-being of their peoples will result in increasing movements of petroleum between producing and consuming countries. Thus, it is highly important that the necessity for unimpeded movement of petroleum be recognized by all States and hence provided for in a Law of the Sea Convention in the international community interest. The present magnitude of petroleum movement is evidenced by the extent of daily Free World oil movement during 1972, as shown below (in barrels): Exports from the Middle East to Europe-8,l15,OOO Exports from the Middle East to Japan and other Eastern Hemisphere -6,079,000 Exports from North Africa to Europe -3,040,000 Exports from the Caribbean to North America-2,04l,OOO Exports from West Africa to Europe -1,284,000 Exports from the Caribbean to Europe and other Latin American countries-1,275,000 Exports from the Middle East to North America-l,077,OOO Movements between other ports 6,088,000. These daily movements in 1972 totaled about 29 million barrels. * Department of the Interior, Office of Oil and Gas, Estimated International Flow ot Petroleum and Tanker Utilization: (May 1972). 10

19 Now, and for decades ahead, Japan and Western Europe, as major petroleum consuming areas, will be crucially reliant upon maritime commerce, including tankers. The petroleum exporting countries depend upon tanker movement for the producing revenues that provide for their economic development and growth. There is scarcely any part of the world which is not served by tankers for energy needs. Developing States have a growing stake in this commerce as their own industrial growth proceeds and their reliance upon the export or import of oil increases exponentially. The United States is no exception. It is today dependent upon foreign sources for some 30 percent of its oil supply. It is anticipated that by 1985 the United States will be importing over 50 percent of its oil requirements of which 10 to 11 MMB/ D will be waterborne imports of crude and products. According to the NPC U.S. Energy Outlook Report, "if... the total waterborne oil requirements in 1985 were to originate in the Persian Gulf, a fleet of at least four hundred 250,000 DWT [deadweight tons] tankers would be required." * The Report also projects the importation of about 4 trillion cubic feet of liquefied natural gas annually by This would require the construction of about 90 highly specialized vessels, each having a maximum capacity of approximately 1 million barrels of oil equivalent. With this estimated large increase in the movement of petroleum to the United States (which illustrates international movement generally), it will become more important to both producing and consuming nations that movement be consistent with internationally agreed standards, particularly reflecting the interests of Coastal States. The cost of transporting petroleum U.S. Energy Outlook, p The figures used including oil import requirements are ba sed on the Case III (intermediate case) estimates in the Report. from producing to consuming countries is a significant element in determining the price of petroleum products to the consumer. Economies of scale and concern for holding down costs of delivery of petroleum have heavily influenced crude oil tanker size. In less than a decade, we have seen the average tanker size grow from 21,187 DWT to 45,840 DWT. New crude tanker buildings in recent years have been almost all larger than 200,000 DWT, and tankers of up to 500,000 DWT are now under conf'truction. Still larger ones have been designed. Examples of savings in transportation costs of crude oil, according to the U.S. Energy Outlook Report, are as follows: If, for example, Persian Gulf oil were delivered to existing U.S. ports, 50,000 to 70,000 DWT tankers would have to be used. The estimated transportation cost would be in excess of $9.00 per ton. Figure 107 [see chart below] shows that a 250,000 DWT tanker could deliver the same ton of oil for about $6.55. However, until such time as deepwater terminals are built-again using the Persian Gulf/ U.S. East Coast example VLCC's [very large crude carriers] will be used for the majority of the voyage to neighboring foreign deepwater terminals (e.g., Eastern Canada or the Bahamas) with 50,000 to 70,000 DWT tank ships being used for transshipment into U.S. ports..figure 107 shows that such an arrangement requires a $0.50 to $0.70 increase per ton in transportation charges.t Similar comparisons would, of course, be applicable to other delivery points. Economical transport and the movement of petroleum generally require passage of crude oil tankers through coastal waters worldwide and through principal t u.s. Energy Outlook, pp

20 8.00 r----., ,---~--- r--- r---, 7.50 H;-T-----lr ~ z o I-.J... W U wen ::::> I en o U Z o i= ~ a: o CL en Z ~ I t-\----f---..3~~ ~----j PG I FREEPORT BAHAMAS VIA VLCC TRANSSHIPMENT TO USEC IN 50,000 OWl TANKERS 6.50 r-----tt---t----+~: ~"'d l PG I CANPORT CANADA VIA VLCC TRANSSHIPMENT TO USEC IN 50,000 OWl TANKERS 6.00 t lr ~~ ~ Note: PG - Persian Gulf USEC - U.s. East Coast PG I USEC DEEP WATER TERMINAL THOUSAND DWl Transportation Costs to U.S. East Coast (USEC) from Middle East VLCC Transportation Costs Including Terminalling and Transshipment Costs, * international straits. There are few alternate routes available to VLCC's, and those that are available have serious cost consequences. In the absence of * U.S. Energy Outlook, Fig. 107, p international agreement, these routes could entail political risks as well.t The principal sources of Free W orid t See Appendix F, "Straits Used by Tankers and Alternate Routes." 12

21 crude oil outside North America are found presently in the Middle East, North Africa, West Africa, Indonesia and Venezuela t with the West Coast of South America showing promise. In addition, the world's continental margins are among the most promising frontier areas for oil and gas. Alaska and Arctic Canada will constitute significant crude oil and gas sources when pipelines or alternate transportation plans become realities. While today's largest markets for world crude oil are North America, Western Europe and Japan, other areas are becoming significant markets for oil as their economies industrialize and the standards of living of their people improve. The principal straits used by tankers are the Straits of Bosporus-Dardanelles, Dover t Florida, Gibraltar, Hormuz, Lombok t Luzon t Malacca-Singapore, Mozambique t Skagerrak, and, should the Suez Canal be opened, Bab el Mandeb. While there are many other straits t these are the most important from the standpoints of traffic density and economic movement of goods by sea. Significant change in either the location of the supply source or of consumption of crude oil could bring about a major change of trade routes. In summary, unimpeded commercial navigation for the international community upon the world's oceans remains indispensable for international commerce, communications and peaceful relations among States. Freedom of commercial navigation-transportation of goods and commodities by ship-is contributing greatly to the economic growth of all States. For todais developing countries, such freedom and transport will be essential to their economic growth and improving standards of life. Unimpeded commercial navigation will be necessary for the export of commodities from the developing countries which will provide earnings for their development. C. Existing International Law Relating to Navigation The previous discussion has emphasized the interest of all States in the general matter of continuous and safe passage of maritime commerce and indicated those straits which are of critical importance. The extent to which existing international law is adequate to ensure such passage has become increasingly subject to question. From a review of existing law, * it is clear that international agreement on the extent of Coastal State rights relating to navigation in waters adjacent to their coasts is essential if a necessary balance is to be achieved between the needs of such States and the requirements of international navigation. Such agreement would have to embrace the rights and duties of maritime commerce passing not only through territorial seas and straits, but also through those areas subject to the "economic" jurisdiction of Coastal States and through archipelagic waters. Centuries of effort have contributed to the growth of law in most of these respects. With the possibility of impending change in the jurisdictional interests of Coastal States in the marine areas off their coasts, it is imperative that commercial navigational rights in such areas be recognized and stabilized for the benefit of all nations. D. Conclusions and Recommendations A principal objective of the U.S. Government in the Law of the Sea Conference and Convention should be to obtain international agreement confirming the principle that the merchant vessels of all nations enjoy a right of unimpeded navigation on the world's oceans. This right should be subject to internationally agreed rules and regulations relating to safety including ship design and con- See Appendix G, "Existing Law Relating to Navigation." 13

22 struction and pollution prevention, with particular attention to the special concerns of Coastal States in waters adjacent to their coasts. The exercise of this right of navigation must be in harmony with other lawful uses in the area and subject to internationally agreed standards and procedures for accommodating conflicts between uses, should they arise. It is the considered opinion of the National Petroleum Council that the interests of the international community, including those of the United States, would be better served by departing from the earlier use of terms regarding navigation such as "innocent passage" and "free transit," insofar as commercial navigation is concerned. Such concepts carry with them connotations which are not helpful to understanding the problems and needs of international transport. Instead, we suggest an approach concerned with facilitating the international community interests in trade and the general movement of commodities and goods, taking due account of the interests of Coastal States. This approach describes the nature of the navigational right of merchant shipping rather than referring to a formula or a label. The recommendations of the National Petroleum Council regarding navigation from port to port are concerned with merchant vessels, particularly those engaged in the embarkation, transport and delivery of petroleum. Thus, this Report and its recommendations respecting international navigation relate principally to the needs of the international community for the movement of petroleum from producing to consuming countries. Although the Council believes the recommendations made herein to be fully consisterj with the needs and rights of other navigational users of the oceans, this Report and its recommendations do not address themselves to the needs of any other such users. In advancing these recommendations, it is assumed that the internationally agreed width of the territorial sea will not exceed 12 nautical miles. With an internationally agreed broad economic resources zone offshore Coastal States, a serious question arises as to whether there is justification for a territorial sea even as wide as 12 miles. Indeed, a territorial sea not exceeding 3 nautical miles would diminish the significance of the straits issue. Following are the recommendations of the National Petroleum Council: 1. The first of these recommendations is fundamental: Merchant vessels engaging in mere transit through straits used for international navigation enjoy a right of unimpeded navigation provided such vessels in transit are in compliance with internationally agreed safety standards, including ship design and construction and pollution prevention provisions, and internationally agreed standards designed to accommodate other uses in the area. 2. The right of merchant vessels engaging in mere transit should be generally applicable in territorial waters subject of course to the same standards as those applicable in straits used for international navigation. 3. In waters seaward of the territorial sea including those of the area in which the Coastal State exercises limited resource jurisdiction, the present character of the waters as high seas must be preserved with continued freedom of navigation. 4. Coastal States should be authorized by the Convention to determine compliance with internationally agreed navigation standards, including adherence to internationally prescribed safety lanes, in limited areas in the waters adjacent to their coasts to be internationally determined which under all of the circumstances necessitate the applicability 14

23 of such standards. * The interests of all States in freedom of navigation, however, require that prompt procedures be agreed upon so as to permit the immediate release of a vessel upon provision of appropriate guarantees to comply with a properly adjudicated order enforcing such internationally agreed standards. In the view of the National Petroleum Council, such disputes should be settled in accordance with the dispute settlement procedures to be provided for in the Law of the Sea Convention.t And in a case in which it i$ found under those procedures that a Coastal State, in exercising this limited enforcement jurisdiction against a vessel, acted arbitrarily or without reasonable cause, the vessel owner or cargo owner would be entitled to damages for any injury resulting from such exercise. 5. Whatever general provisions of a Law of the Sea Convention might be adopted regarding the status of archipelagic waters, the right of navigation as * See Chapter Three, pp for recommendations as to limited jurisdiction of a Coastal State respecting pollution from vessels. described herein should be applicable to merchant shipping transiting archipelagos. Such transit would only involve movement through the archipelago for the purpose of reaching points beyond. The U.S. position should take account of the particular interests of Coastal States in the safety of navigation and the problem of pollution in unusually congested coastal waters. Certain straits heavily used by merchant shipping are illustrative of such interests of the adjacent Coastal States. In such situations, the Law of the Sea Convention could provide for the establishment of regional commissions comprised of Coastal States flanking the area and other nations having an interest in navigation of those waters. These commissions could develop, in conjunction and consultation with the Inter-Governmental Maritime Consultative Organization (IMCO), international regulations relating to navigational safety, pollution prevention and the nature and funding of needed facilities':!: t See Chapter Five, "Settlement of Disputes." :j: Note in this connection comments concerning regional pollution control organizations on p

24

25 CHAPTER TWO INTERNATIONAL COMMUNITY INTEREST IN STABLE INVESTMENT CONDITIONS In most economic zones under the jurisdiction of Coastal States beyond their territorial seas and in the international seabed area seaward of such zones, private investment and private enterprise will be needed for the development of mineral resources. It is not the purpose of this Report, however, to argue the case of private enterprise and private investment against publicly owned ventures and planning. The benefits of large private capital investments in offshore areas-such as those in the North Sea, the Gulf of Mexico and the areas off the coasts of West Africa, the Middle.East, Indonesia, Australia and Southeast Asia -have been dramatically demonstrated in recent years. A. Area of Coastal State Resource Jurisdiction Acceptance by the United States of "virtually complete Coastal State resource management jurisdiction" in adjacent seabed areas is conditioned, inter alia, on the establishment of "international treaty standards to protect the integrity of investment." * It is the view of the National Petroleum Council that such See Appendix C, Statement of Mr. John R. Stevenson. protection is demonstrably in the interests not only of investors and their governments but also of all other States-particularly those Coastal States which are concerned with resource development of the seabeds adjacent to their coasts. This conviction is based not only on the necessity of maintaining stability for the effective development of offshore areas but also on the limited availability of capital to meet the enormous capital requirements for such development and the consequent likelihood of selectivity in the use of such capital in high risk areas. Apart from the overall interests of the international community in the stability of investment conditions and the free flow of capital, technology, know-how, goods and commodities, the need for such protection must also be considered in the light of several key factors. The decision whether or not to develop the mineral resources of an adjacent seabed will, of course, lie with the Coastal State. When a Coastal State decides to open an offshore area for development, it will have the choice of (l) organizing exploration and exploitation through its own government agencies, (2) granting exclusive rights to private operators, or (3) providing for a form of organization that will combine both pri- 17

26 vaie and public interests. Whichever method is elllployed, large amounts of capital will be required. Except in a few situations outside the developed countries, such capital must come largely from foreign sources. Efforts to obtain capital for offshore operations in one country or area will have to compete not only with the demands on the capital markets of the petroleum industry for its operations in other areas but also with those of all other users of capital, including other energy industries and governments themselves. A primary source of capital for offshore and other operations, in developing and developed countries, is the oil industry itself. Apart from funds internally generated, established companies obtain capital from outside sources in the form of long-term or short-term loans and by means of equity capital. Credit would normally be provided on the security of a company as a whole and risk capital on the basis of its overall operations and prospects. The latter would, of course, largely depend on appraisals by potential investors of sufficiently attractive earnings. At the same time that rapid development of offshore areas is taking place, other sources of capital are emerging. At times, institutional funds are available in the form of credits secured by future production. New ventures formed especially for the exploitation of particular areas may meet their own capital requirements by public issues. Drilling contractors as concessionaires may themselves finance op~rations by means of offering participations in offshore ventures. In addition, a major source of capital appears to be developing on a large scale as a result of greatly increasing revenues flowing from the oil industry to governments of oil producing countries. During the decade which ended in 1970, the oil industry's total capital expenditures in the Free World, including exploration expense, ranged from a low of $11.4 billion in 1961 to a high of nearly $21.5 billion in In 1971, the total was approximately $23.3 billion. On production and exploration alone, expenditures totaled approximately $78 billion in this II-year period. * The comparisons shown in the table below illustrate capital expenditures of the Free World petroleum industry during the 10-year period and in the year 1971, both as to overall expenditures and separately as to production and exploration. While the figures are primarily significant with regard to the actual search for and production of oil and gas, heavy expenditures are also required for ancillary activities such as the construction and operation of natural gas plants, pipelines, tankers, storage facilities, refineries and distribution facilities as well as for overheads and other intangibles. To facilitate the comparisons in the following tabulation, expenditures are differentiated by regions. In the past 15 years, the entire Free World oil industry has met, on an annual average, approximately 79 percent of its capital requirements from its own internal sources. While it has historically looked to outside sources for no more than 21 percent of its requirements, the trend is definitely in the direction of greater needs from such sources. At the same time that this trend is developing, substantial increases in payments to governments have had their adverse effect upon earnings. Unless the industry's cash flow can be substantially increased, the industry will be even more depern::lent on outside sources to meet its capital requirements. Moreover, the increasing emphasis on high cost offshore operations underscores the prospect that the industry will have to obtain around 40 Richard C. Sparling and Norma J. Anderson, with John G. Winger, Capital Investments of the World Petroleum Industry, 1971, The Chase Manhattan Bank ( December 1972), pp

27 percent of its capital requirements from outside sources.* Various estimates have been made of requirements of the industry during the years ahead. One recent estimate places the industry's total worldwide financial requirements at $1,000 billion for the 15 year period These include capital spending, debt servicing and dividends. It is, of course, essential to maintain adequate dividend distributions if equity capital is to be attracted to an enterprise. Of this total, as much as $600 billion might be required for capital expenditures. This figure is estimated on the basis of "normal inflation of not more than 2.5 percent per annum. If the inflation rate were to run as high as 5 percent, the capital expenditures required would * Capital Investments of the World Petroleum Industry, 1971, p. 5. probably reach $800 billion and increase total requirements well above $1,000 billion. If earnings increased annually at a rate of 8 percent-approximately the growth obtained in the 1960's-some 60 percent of the $1,000 billion total would be met by internal generation. This would leave $400 billion to be obtained from external sources. Over the 15-year period, the average would be approximately $27 billion per annum, or roughly 7 times the amount raised from external sources on an average annual basis in the period In 1971, the industry raised from $6 to $7 billion, both by borrq~ing and by equity financing. If $7 Ibillion is taken as the starting figure at the beginning of the 15-year period, the industry might have to seek as much as $47 to $50 billion annually by It is anticipated that, even if an 8-percent growth rate in earnings could be maintained over this period, capital spending CAPITAL AND EXPLORATION EXPENDITURES* (Billions of Dollars) Production and Exploration Total Capital and Exploration Expenditures Areas United States and Canada Western Europe Total Other Western Hemisphere Middle East Africa Far East Total Combined Total Foreign Flag Tankers Total * Capital Investments of the World Petroleum Industry, 1971, pp

28 would have to be cut back in order to stay within the bounds of indicated availability, unless the industry's cash flow is increased sufficiently. If the oil industry were not to mobilize and make available the capital and undertake the risks involved in offshore operations in all areas, it is doubtful that other investors would serve this function. The demands for limited funds would have to compete not only with the requirements of long-established and credit-worthy members of the oil industry itself but also with the tremendous claims on the capital markets by other potential users. Where the industry itself resorts to the capital markets, many variables are involved, such as (1) the willingness of investors to meet demands of the industry in competition with opportunities for other forms of investment; (2) the security provided for various types of investment; (3) the ability of the industry to generate sufficient earnings to attract capital investment; and (4) the policies of governments relating to taxation, balance of payments, social demands, etc. Of particular interest to oil producing countries is the fact that as the cost of oil operations increases alternative sources of energy, such as coal, oil shale, tar sands and nuclear power, will be increasingly attractive to investment capital. The prospect of a diminishing availability of capital for the petroleum industry in relation to rapidly mounting requirements (Le., the inability of the industry with inadequate profit margins to attract the requisite capital) compels the conclusion that oil companies will be increasingly selective in their investments. While costs, location and size of resource are normally regarded as determining factors, security of terms must be ranked among them. Faced with a choice between obtaining supplies from reserves and alternative sources in politically stable countries and the hazards of expropriation, nationalization and other confiscatory treatment in politically unstable areas, it must be anticipated that scarce capital resources will be employed in places where legal stability over long periods of time is indicated. In the light of this situation, and regarding the great need for stable conditions worldwide in order to promote economic development, it is urged that every effort be made to obtain acceptance of provisions in a Law of the Sea Convention recognizing and ensuring an obligation on the part of Contracting Parties to observe international standards governing the protection of investments and other property in which foreign persons are substantially interested. The need for this is emphasized by recurring debate in the United Nations and elsewhere on the subject of "permanent sovereignty over natural resources." Again and again, this theme is invoked by governments to justify expropriations of foreign-owned enterprises without adequate compensation, and indeed in many instances without any compensation at all. It is also invoked to justify repudiations of long-term contractual arrangements freely entered into by governments with foreign-owned enterprises. It is apparently the belief of some governments that the nature of "natural resources" somehow justifies uncompensated takings of foreign-owned property rights and unilateral breaches of contracts relating to them, and somehow exempts the States taking such actions from rules of international law relating to the protection of foreign-owned property rights. These 'views have led to a series of General Assembly resolutions on the subject of "permanent sovereignty over natural resources," which are apparently designed to prejudice existing rules of international law and are frequently invoked to justify governmental actions contrary to such rules. Nevertheless, despite the overwhelming voting power of the developing countries in the United Nations, relevant prin- 20

29 ciples of international law persist and are recognized. Thus, in General Assembly Resolution 1803 (XVII), which is the basis for subsequent resolutions and is frequently cited as justifying expropriatory and repudiatory actions, certain fundamental principles are affirmed. * It is provided in this resolution that, where the importation of foreign capital is authorized by a State, such capital and the earnings on it shall be governed by the terms of such authorization,... by the national legislation in force, and by international law.... Nationalization, expropriation or requisitioning shall be based on grounds or reasons of public utility, security or the national interest.... In such cases the owner shall be paid appropriate compensation, in accordance with the rules in force in the state taking such measures in the exercise of its sovereignty and in accordance with international law... Foreign investment agreements freely entered into by, or between, sovereign states shall be observed in good faith... The importance of these provisions and the vital interest of all States in their observance is evidenced by the harmful consequences to a country whose government fails to adhere to them. It is not only the private party concerned which suffers when its property is taken without adequate compensation or its contracts with a government are violated. Any such rupture is certain to have damaging repercussions on other investments in the same country and deter future investors from embarking on ventures of great importance to the government concerned and the economic well-being of its people. It also disturbs the equilibrium of international trade and investment, fos- * The Resolution was adopted in December 1962 by a vote of 87 in favor, 2 opposed and 12 abstentions. ters resentment in the international community, and leads to retaliatory measures that affect other States as well. It is, of course, recognized and accepted that private concerns investing in foreign countries must respect the laws, policies and economic and social objectives of those countries and must abide by undertakings given to the governments of those countries in connection with the investments. In consultation with the host government, an investor should ensure that its investment fits satisfactorily into the economic and social development plans and priorities of the country. Most foreign investors encourage local participation in management, promote nationals to posts of increasing responsibility, and provide the training and experience that are prerequisite to such promotion. Whenever practicable, such investors should promote the technological capacity of the country, for example, by training local staff, assisting educational institutions and, where conditions for efficient research so allow, establishing suitable research activities in the country. It is clearly in the interest of all States to encourage economic development. When private foreign investors undertake such development in a manner compatible with the economic and social policies of the country concerned, the observance by all parties of international law standards, including adherence to freely negotiated contracts, is essential. The sanctity of obligations is a basic norm of international law, and its application to private investment contracts freely entered into was recognized and accepted by the U.N. General Assembly, as noted above. Unwillingness to adhere to the above-quoted stipulations of this U.N. declaration, or to accept the facilities relating to conciliation and arbitration currently provided by the World Bank must, therefore, not only indicate a reluctance to adhere to norms of international law, recently affirmed, but also 21

30 suggest to an investor legal and political instability in the country evidencing such refusal. If the flow of capital to the exploration and exploitation of mineral resources in a large number of offshore areas is to be actively promotedt in the interests of meeting the energy requirements of the United States and other countries and promoting the economic development of the entire international communityt it is vitat for the reasons set out above t that the Law of the Sea Conference adopt appropriate treaty provisions recognizing the rights and obligations of States in relation to such investments and operations. In view of the great benefits to be derived by all States from achieving broad diversity of supplies and ensuring stability of suppliest and in view of the fact that a substantial portion of petroleum resources are estimated to be in offshore areas to be covered by the Conventiont the U.S. Government is urged to make every possible effort to obtain such adoption. B. Area Beyond Coastal State Resource Jurisdiction In the areas beyond Coastal State economic resource jurisdictiont it is assumed that private operators would be licensed either (1) by an international organization when sponsored by party States, as provided for in the U.S. draft treatyt or (2) by individual States which (a) would have established their rights by registration with an international organization or (b) would have been licensed by such organization. From whatever entity the private party derives its rightst the same need for security would arise as in the case of rights granted by a Coastal State. From the above discussion which reflects existing international law with respect to State contractst it becomes clear that State grantors of such rights would be bound by their contracts with private parties and by principles of international law governing takings of private property and the duty to pay full compensation. The same principles would apply to contracts entered into with an international organization..that it would be bound by such contracts is evident not only from U.N. Resolution 1803 (XVII) referred to above but also from the U.N. Declaration on Principles of International Law concerning Friendly Relations and Cooperation among Statest which includes the provision that Ifeach State has the duty to comply fully and in good faith with its international obligations.if * If individual States are thus bound by their obligationst clearly an international organization created by them and deriving all its powers from them would be bound. Such an organization could not exist if it were not bound by the law which created it. Neverthelesst because some States assert that the principle of sovereignty gives themtand a fortiori an organization created by them, an absolute right to repudiate or modify their engagements, it is important to provide in the Law of the Sea Convention that the organization as well as State parties are required to perform their obligations in accordance with agreements entered into by them and to respect the property rights of those with whom they contract. While such provisions wouldt as stated t be implied in any treaty establishing an international organizationt it would be advisable to make them explicit at the present time. C. Conclusions and Recommendations All States have a genuine interest in an orderlyt expanding international economy characterized by the free movement of capitat know-how and technologyt and the flow of commodities and goods in international commerce. The interests of the developing countries are * Resolution 2625 (XXV); 25 GAOR Supp. 28 (A/8D28, 1970), pp

31 particularly involved in this process as their governments strive to enhance their own economic development and thereby improve the quality of life and their peoples. As this Report has indicated, the continued flow of these elements of development to the developing countries has been seriously deterred by certain instances which have disregarded the fair treatment of foreign private investmenttreatment that has violated the fundamental principles of international law. The National Petroleum Council believes it essential to achieve broad understanding that the mobilization and availability of the vast capital sums and continually improving technology required to provide for the world's energy requirements have been seriously endangered by the failure of certain States to treat existing foreign private investments and agreements with foreign private investors in accordance with international law standards. Thus, the National Petroleum Council strongly recommends that a Law of the Sea Convention dealing with the exploitation of the mineral resources of the continental margin under Coastal State resource jurisdiction and the deep ocean area beyond include provisions along the following lines: 1. Integrity of Agreement between a State and a Foreign Investor An agreement between a State and a foreign investor or operator for exploration and development of mineral resources in seabed areas subject to the economic jurisdiction of such State or with respect to which it is entitled to grant rights, whether in the form of a license, permit, concession or any other form, shall be binding, according to its terms, upon both parties. 2. Integrity of Agreement between an International Organization and an Operator An agreement between an international organization and an operator for exploration and development of mineral resources seaward of the offshore areas subject to the economic jurisdiction of Coastal States, whether in the form of a license, permic concession or any other form, shall be binding, according to its terms, upon both parties. 3. Taking of an Investment Should a State expropriate or otherwise take or impair the investment of a foreign investor or operator in mineral resource development in a seabed area subject to its jurisdiction or with respect to which it is entitled to grant rights, such State shall promptly provide such investor or operator with compensation in an effectively realizable form representing the full value of the property and rights taken or impaired. Should there be any circumstances in which under the Convention an international organization might legitimately impair the rights of an investor or operator, such compensation shall be promptly provided as aforesaid. Disputes arising with respect to a particular investment or operation governed by this Convention including those involving private parties should be resolved under the dispute settlement procedures included in the Convention. * See Cha pter Five, "Settlement of Disputes." 23

32

33 CHAPTER THREE PROTECTION OF THE MARINE ENVIRONMENT A. Sources of Marine Oil Pollution Marine oil pollution has several sources, including various land-based activities, natural oil seepages, vessels of all sizes and types, and seabed resources exploitation. Land-based activities constitute by far the largest source, accounting for as much as 90 percent by some estimates. * The land-based pollutants include not only river-borne waste oil products from industrial operations, automobiles and refinery effluents, but also airborne hydrocarbons, resulting from vaporization of petroleum products, that are carried to the sea by wind and rain. The extent of natural oil seepages into the oceans is, of course, unknown, but there is evidence that it represents a substantial quantity. As pollution from onshore activities is beyond the mandate of the Law of the Sea Conference, and natural seepages cannot for the most part be contained, this discussion is confined principally to the two remaining pollution sources-vessel discharge and seabed resource exploitation. While these sources are of concern, they are * "Competence To Establish Standards For The Control Of Vessel Source Pollution," Working Paper Presented to the U.N. Sea-Bed Committee by the United States of America, April 2, 1973, p. 1 (A/AC.l38/SC,III/L.36). significantly lesser sources of pollution than are the land-based sources noted above. 1. Vessel Discharge Of the total oil pollution resulting from vessels and seabed exploitation, it has been estimated that more than 95 percent comes from vessels, as compared to less than 5 percent from seabed exploitation.t Studies indicate that oil pollution of the sea from vessels results mainly from operational (and often permissible) discharges of many kinds, rather than from major oil spills. Oil tankers represent only one of the many classes of vessels causing oil pollution. International vessels over 1,000 gross tons can be grouped as follows:.. About 14,000 naval vessels of all types More than 11,000 dry cargo freighters About 4,500 tankers Approximately 3,400 bulk carriers Nearly 1,000 passenger-cargo ships. t "Tankers and Ecology," Paper Presented by Joseph D. Porricelli, Virgil F. Keith and Richard L. Storch, at the Annual Meeting of the Society of Naval Architects and Marine Engineers, New York, N.Y., November 11-12,

34 Almost 1,000 refrigerated vessels. * The total number of vessels under international registry regardless of size is about 55,000. Additionally, there are more than 53,000 vessels of 1,000 gross tons or less in the U.S. registry, and it is estimated that more than 5 million pleasure craft are registered in the United States alone. The pumping overboard of bilges and the discharge of raw sewage and food waste from these vast numbers of craft of all kinds clearly are major causes of pollution at sea. Bilge pumpings from all vessels are in the process of being brought under control or indeed eliminated by the development of onboard separators or the installation of holding tanks. The latter would be more comprehensive, but would also require additional construction of adequate disposal facilities at terminals, shipyards and marine facilities. Routine tanker operations, primarily involving deballasting from cargo tanks and discharge of tank washing, are also causes of oil pollution. However, tanker operations are estimated to account for no more than 40 percent of all oil pollution from ships.t Most of this is believed to come from tankers that do not practice "load-on-top" procedures (described below) instituted by the international petroleum industry to combat pollution from discharges of oily tank washings or ballast. Before load-on-top procedures, tankers which had delivered their cargoes cleaned their oil storage tanks at sea with seawater and dumped the resulting oily water into the ocean. This cleaning operation is associated with ballasting procedures and changes in types of oil to be carried. As an oil tanker unloads, * Naval vessel data from F. T. Ja ne, Janes Fighting Ships, 1968/ 1969 (1969 ); other data from U.S. Department of Commerce, Maritime Administration, Merchant Fleets of the World (June 30, 1972 ). t "Tankers and Ecology." it takes on seawater in its oil carrying tanks to provide ballast for the return voyage to a port of loading. Safe and stable navigation requires ballast of approximately 40 percent of the deadweight tonnage of the vessel. Ballast may, however, be increased to some 80 percent of vessel deadweight tonnage where extremes of weather are encountered. When the vessel arrives at the port of loading,.this ballast must be discharged to make room for the cargo. To avoid discharging oil-contaminated ballast water in port, it previously was customary to flush out the tanks at sea on the ballast leg and take on clean ballast. But when load-on-top procedures are utilized, the oily water mixture is collected in a single tank in the ship, and the oil and water are separated. The water is then decanted and the oil remains in the tank. Another load of oil is then loaded-on-top of the existing oil. Although the discharge of oily wastes is still permitted under international law in certain areas of the oceans, 80 percent of the world's tanker fleet subscribes to load-on-top. As a result, intentional discharge of oil into the ocean from tankers is being significantly reduced. Although oil spills resulting from tanker accidents tend to be widely reported, major spills (those involving 2,400 barrels or more) have in fact been relatively few in number. Oil spills from tanker accidents are estimated to account for only about 10 percent of the total sea pollution caused by all vessels.:j: It is fair to say, however, that these oil spills create more headlines. Prevention of spills from tankers has been aided by several developments. Most new giant tankers are equipped with automatic loading controls that minimize the chance of a spill caused by human error during transfer of cargo. Good maintenance practices aboard ship and the sound basic design of the vessel are also important in the prevention of t "Tankers and Ecology." 26

35 spills. In addition, improved education and training of ships' personnel and more stringent operating, navigation and traffic controls are helping to reduce the possibility of spills caused by collision or grounding. Improved transportation support services (weather forecasting and navigational aids, for example) are also helping to reduce the incidence of such accidents. Significant advances have also been made in the control and cleanup of oil spills when they do inadvertently occur. Oil that is occasionally spilled during loading or unloading can now be contained by floating booms or air barriers and then removed from the water's surface. Sorbent materials are used effectively to control the spread of a spill. There is some evidence that certain microorganisms might be useful in degrading hydrocarbons and thus dissipating spills. Chemical dispersants are available and have proved useful in special situations. Despite what has been accomplished, there remains a need for further research on containment and recovery of oil spills at sea. Current efforts underway in this area must be continued and expanded, and additional funds should be allocated for oil spill control research. This seems an appropriate area for continuing joint industry-government cooperation. 2. Seabed Resource Development Although the possibilities for the recovery of a variety of minerals from the seabed have been widely publicized in the last few years, petroleum operations currently dominate marine mining and will be the subject of discussion here. Offshore oil exploration and development do not cause significant pollution problems when properly conducted and controlled. As noted earlier, pollution from such operations is estimated to account for less than 5 percent of the total oil pollution resulting from both vessels and seabed development. Of the primary activities involved in offshore oil development-geophysical surveying, drilling, producing and pipelining-only the last three have potential for oil pollution. With regard to drilling and producing operations, pollution can result from blowouts during drilling or rupture of well casing due to storms or ship collision and from spillage of oil in storage at the surface. In order to minimize these possibilities, offshore oil facilities are built to withstand the severest storms and other marine hazards. Highly sophisticated, remotely controlled or automatically actuated safety devices are used in offshore operations. Improvements in preventive practices have reduced spills or uncontrolled oil flows from wells to rare occurrences. Of more than 16,000 marine wells drilled to date in U.S. waters, only 3 have resulted in a pollution hazard as a result of blowouts, and none has caused lasting environmental damage. For example, after the Santa Barbara incident, University of Southern California scientists in a comprehensive 2 year study reached the conclusion that no permanent damage resulted from the spill. * The petroleum industry is dedicated to the prevention of such spills and to controlling them and minimizing damage from them if they unfortunately occur. Moreover, the Government of the United States promulgates the rules and regulations by which the oil industry must operate on the Outer Continental Shelf.t That these regulations, procedures and practices have been effective in preventing serious pollution is shown by the very low incidence of accident * D. Straughn, Biological and Ocea nographic Survey of the Santa Barbara Oil Spill-l969-l970, Allen Hancock Foundation, University of Southern Ca lifornia, Two Volumes ( 1971 ). Other experts, however, que stion whe ther sufficient time has elapsed since the incident to d etermine the 10ngterm impact. t Outer Continental Shelf orders issued by the U.S. Geological Survey are pursuant to 30 CFR , 34 F.R , August 22,

36 in offshore operations. However, regulations cannot advance faster than technology. As technology is improved, regulations must be revised and updated. Optimurn regulation cannot be a static thing. In the past, submarine pipelines have been used principally to transport oil and gas from offshore fields to shore storage and processing facilities. However, with the growing number of deepwater terminals and port facilities in recent years, submarine pipelines are being used increasingly for the transport of oil between these facilities and the shore. Pipelines are a very safe method of transport. For example, over the entire U.S. pipeline system, losses from spillage are very low, about.006 percent of the volume moved annually. * Block valves, line pressure valves and automatic shutdown devices are among the safety equipment items that reduce the loss of oil when and if a leak should occur. Additional advances in safety equipment and operating procedures currently underway will reduce potential pollution from pipelines even further. 3. Land Sources It is generally known that, by far, the greatest sources of marine oil pollutants originate on land, which may amount to as much as 90 percent, as noted above. The point of entry varies, but the discharge of pollutants into the ocean by rivers (mainly of domestic sewage, industrial wastes and agricultural runoffs) is the most serious. In addition, the concentration of population and industry at the ocean edge has led to significant discharges of sewage and wastes directly into the ocean. Pollutants from land such as lead, DDT and vaporized hydrocarbons are borne by the air and are also * NPC, Environmental Conservation-The Oil and Gas Industries, Volume One (June 1971 ), p. 71. deposited in the ocean by fallout from the atmosphere. B. Interests to be Accommodated by Pollution Control Standards 1. Vessel Discharge In 1946, only about 200 million tons of oil were moved at sea by tankers. Today the volume has reached a rate of 1.5 billion tons per year and is growing by 160 million tons per year, only slightly less than the 1946 total transport rate. Substantially all countries have a stake in this trade in one way or another. There is, therefore, a widely shared interest not only in achieving adequate pollution controls for oil-carrying vessels but also in doing so without unnecessary expense, since costs must be borne by both exporting and importing countries. Efficiency in pollution control with respect to marine transport of petroleum would be greatly facilitated by international acceptance of certain standards, and it is important that the Law of the Sea Convention provide adequate inducements and benefits to assure acceptance of such standards by all States. Acceptance of uniform worldwide standards in matters of design, construction and equipment for minimizing pollution hazards from tankers will help to keep down transportation costs. If each Coastal State were independently to establish its own standards, the result would be a crazy quilt pattern of requirements which would make compliance difficult and unnecessarily costly at best. Efficiency in the effective scheduling of available tanker tonnage is facilitated by the traditionally free access which vessels have to most ports in the Free World, which is the result of the general acceptance by most nations of internationally established vessel construction, safety and operating standards. An example of nonuniformity in standards may be seen in recent U.S. legislation which authorizes the U.S. 28

37 Coast Guard to establish pollution control standards for vessels in U.S. waters and to enforce these standards for foreign as well as domestic vessels. The sewage retention facility requirements of the Water Pollution Control Act Amendments of 1972, Section 312, will impose restrictions on foreign vessels entering U.S. waters which will require vessel modifications to meet the requirements of U.S. law. The U.S. Coast Guard Pollution Prevention Program Regulations requires special provisions for retention of bilge wastes. * Similar controls under the Ports and Waterways Safety Act can be expected. This Report takes no issue with the merits of this U.S. legislation; it refers to it only to illustrate the difficulties that would be presented if all Coastal States were to adopt meritorious but different domestic standards. International standards of pollution control are thus necessary at the earliest possible date. There is also need for widely accepted standards of liability for pollution incidents. If there were uniformity in such standards, one State would be more willing to recognize and enforce awards by courts of other States, and the tendency toward jurisdiction-shopping on the part of vessel owners faced with potentialliabilities would be minimized. The International Convention on Civil Liability for Oil Pollution Damage, recently developed by IMCO and now open for signature and ratification, provides the type of uniform standards that are required.t International cooperation in the establishment and administration of cleanup funds for use after a pollution incident has occurred would help to provide effective and more economical action. Concerned governmental agencies appear to agree that such cleanup costs should be borne by the responsible party within imposed limits of liability rather than by the public in general. If a single ade- * 33 efr ( December 21, 1972 ). t S. ada, The International Law of the Ocean Development (1972), p quate cleanup fund could be established, rather than having each State create its own cleanup fund, costs would be reduced and the matter of cleaning up facilitated. A blueprint and mechanism for providing such funds on an international basis already exist in the form of the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage which was prepared in 1971 by IMCO and which is now open for signature and ratification.:j: The costs of cleanup could be reduced further by a system of underwriting contingent liability rather than maintaining substantial funds when they are not needed. With regard to institutional arrangements for developing pollution control standards for vessels, the NPC believes IMCO to be the most appropriate organization because of its long experience and expertise in this field. IMCO is the only specialized agency of the United Nations concerned solely with maritime affairs. Its membership presently consists of government representatives from more than 70 nations. Other members of the United Nations, not presently members of IMCO, are free to join. It is headed by a Secretary General assisted by a professional Secretariat. Its main functions are carried out by an Assembly of member States and by a smaller Council, together with committees which have certain rulemaking and regulatory functions. These functions could be enlarged by agreement. The most significant of these committees is the Maritime Safety Committee. Pollution control conventions, as well as conventions establishing ship design standards, safe navigation practices and general ship safety, are developed by this Committee and its Subcommittees. Its Legal Committee has developed the International Convention for Civil Liability for Oil Pollution Damage and the :j: The International Law of the Ocean Dev elopment, p

38 International Fund for Compensation for Oil Pollution Damages discussed earlier and a third conventiont the International Convention for Intervention on the High Seast which would accord a State the right to take such measures on the high seas as may be necessary to prevent or mitigate imminent danger to its coastline when a maritime accident has occurred. The Facilitation Committee deals with questions which concern the movement of persons or goods in international trade and is responsible for the acceptance of uniform standqrds for Bills of Lading and customs procedurest among other things. In its 13-year historyt IMCO has developed several amendments to the 1954 International Convention for the Prevention of Pollution of the Seas by Oil for which IMCO has had responsibility. CurrentlYt IMCO is planning a Marine Pollution Conference for 1973 to draft a conventiont the object of which will be to achievet by the end of the 1970 t s, the complete elimination of willful and intentional pollution of the sea by oil and noxious substances other than oil and the minimizing of accidental spills. The scope of responsibilities of IMCO are indicated in more detail in Appendix H. Mr. John R. Stevensont while U.S. Representative to the U.N. Seabed Committeet reviewed the expertise and capabilities of IMCO in a statement to the U.N. Seabed Committee in Geneva on August 2 t 1972t concluding that IMCO's responsibilities should be supplemented and supported and not replaced. * 2. Seabed Resource Development Control of pollution which might result from the development of seabed resources is particularly the concern of the adjacent Coastal State. Pollution from such development would affect the adjacent Coastal State more heavily than any othert and conversely, the adverse economic impact of excessive pollution con-,. See Appendix I for extra ct from this statement. trois would be most strongly felt by the adjacent Coastal State through the increased cost of development resulting from them. Moreovert each Coastal State has an interest in coordinating its pollution control over the adjacent offshore seabed area with that over its land territory in order best to achieve results consistent with its national needst goals and policies. Furthermoret the different circumstances of individual Coastal States would lead to different attitudes with respect to pollution prevention controls on petroleum development. Developing countries may feel that their overall economies can less afford costly pollution control than would be the case with developed countries. Also, for example, a State with a seaside-tourist resource based economy is likely to hold different views than a State with an uninhabited coastline. Neverthelesst in spite of the fact that it is the adjacent Coastal State which has the predominating interest in pollution control of petroleum development in any particular sea floor area of the continental margin, other States may also have interests to be served. Thus, for examplet in the case of several countries bordering on an enclosed or semienclosed sea like the Baltic Sea or the Mediterranean, pollution off the coast of one country is likely to affect the other bordering countries. Moreover, because of the great need for petroleum, there is a common concern among nations for the development of the petroleum resources of the world's continental margins. Thereforet there is adequate reason to justify agreement by the international community on minimum pollution control standards. The interest of the international community in progress toward the development of the petroleum resources of the continental margins may also justify some international agreement on objective criteria to be applied by Coastal States in the event that they adopt do- 30

39 mestic standards more stringent than the international minimum standards. Since there is no existing international agency to develop such pollution control standards, the Law of the Sea Conference should consider the establishment of an appropriate international commission to exercise this function. C. Types of Pollution Control Standards Generally speaking, there are three distinct types of standards for pollution control. First, some standards are cast in the form of equipment and operational specifications. These take the form of regulations which specify the detailed physical characteristics of equipment and operations and regulate or prohibit discharges of particular materials into the surrounding environment. Pollution control standards of this kind tend to be voluminous and technical. They also tend to reflect the technology existing at any particular moment and, therefore, are subject to constant evolution and change. An example of this type of standard is the Outer Continental Shelf Regulations of the U.S. Department of the Interior. *. A second type of standard comprises those which are cast in the form of definitions of desired environmental air or water quality characteristics and expressed in terms of permitted levels of specific pollutants. These represent a method for setting goals to which specification and emission type standards may be tailored. Uniformity is unnecessary and, in fact, undesirable because of widely differing environmental conditions from place to place. An example of standards of this kind is provided by the Air and Water Quality Control Acts adopted in the United States and amended from time to time.t 30 CFR 250 (1972). t Pub. L. No , 77 Stat. 392 ( Dec. 17, 1963) [Clean Air Act]. and amendments; Pub. L. No , 62 Stat (June 30, 1948 ) [Water Pollution Control Act]. and amendments. The third type of standard is the general definition of basic values to be served and the priorities to be established among such values. Agreement on such standards is necessary in order to establish the existence of agreement upon the goals to which more detailed standards are to be directed. The generality of such standards tends to permit universal acceptance and application. For example, the international community has taken a first step in developing general standards of this third type by the endorsement through the Stockholm Conference of the 23 General Principles for Assessment and Control of Marine Pollution.+ As to types of standards suitable for any treaty, only the third or general type, such as endorsed by the Stockholm Conference, can as a practical matter be adopted. This is for the reason that negotiations in the forum of a Law of the Sea Conference do not lend themselves to reaching agreement on technical details. The treaty should, however, establish the necessary international machinery for the promulgation from time to time of more detailed standards and operational procedures. It would appear desirable with respect to the standards relating to vessels that the existing U.N. consultative agency, IMCO, be used and that another organization, parallel to IMCO, be established for setting minimum international standards with regard to seabed resource development. Although it may be inappropriate to include any provision in the treaty relating to the subject of liability of private parties, certainly the treaty should avoid the inclusion of any provisions.which are inconsistent with the principles relating to liability set forth below. In a number of forums consideration has been given to one particular problem of vital importance in this field. This is the question of liability of legal persons other than States. Careful consideration +See Appendix E. 31

40 has been given to this matter by the Congress of the United States and by IMCO in the process of formulating new conventions relating to this subject, notably the 1969 International Convention for Civil Liability for Oil Pollution Damage. In these various forums and after careful consideration, certain principles seem to have evolved, securing somewhat general acceptance. The first principle is the imposition of prima facie liability upon the person in control of the facility from which the pollution emanates. The second principle is that such a person may avoid liability if he can establish that the cause of the pollution was beyond his reasonable control. A third principle adopted is that of limitation of liability from incidents of pollution from ocean-going vessels. D. Jurisdictional Considerations As has been indicated earlier in this Report, there is a broad international community interest in maintaining a right of unimpeded navigation on the world's oceans for commercial vessels, subject only to internationally agreed rules and regulations in the interest of safety including ship design and construction, pollution prevention and accommodation of other uses. This right of unimpeded navigation could be seriously eroded by unreasonable unilateral pollution control requirements that fail to take adequate account of the international interest in such navigation. At the same time, the interest of all States, particularly Coastal States, in maintaining a satisfactory marine environment must be recognized and accommodated. The most promising route to achieving a satisfactory balance between the maintenance of the marine environment and the continued right of navigation and transport by sea lies in reaching broad international agreement among States on pollution control and safe operation standards for vessels moving in international trade. Broad international agreement on such standards and the methods for their application would tend to minimize disputes among States as to applicable regulations and furnish international marine interests with stable and uniform standards. There is also broad international community interest in the conduct of seabed minerals development in areas under Coastal State economic resource jurisdiction insofar as safety of navigation, pollution control and integrity of investment are concerned. E. Conclusions and Recommendations It is recommended that a Law of the Sea Convention embody the following principles and standards regarding pollution control: 1. Standards for Vessel Pollution Control and Their Enforcement (a) Jurisdiction to prescribe standards, including standards of liability relating to pollution from vessels, should be vested exclusively in appropriate international organizations, existing or newly established, particularly those with specialized knowledge and experience in ocean pollution control. It is anticipated that Coastal States will participate in the work of such organizations. Such broadly agreed standards should be applicable upon all oceans and not limited to any particular area or zone of the oceans, but should reflect, where appropriate, special circumstances or unique environmental conditions. (b) Jurisdiction to enforce standards relating to pollution from vessels should be vested in the States of registry and confirmed as regards a Coastal State when a discharge occurs within its territorial sea. In addition, a Coastal State should have limited jurisdiction to enforce internationally prescribed pollution control standards in an agreed breadth of waters adjacent to its coast and seaward of its territorial sea. Such enforce- 32

41 ment jurisdiction of a Coastal State should include the power to detain a vessel only in circumstances where it is either engaged in an act of pollution prohibited by the applicable standards or where there is a clear and present danger that such an incident of pollution will occur if the vessel is permitted to continue on its course. This detention should terminate in a particular case where the vessel has furnished a guarantee that compensation will be made available to cover damage that in fact is found to have resulted from such an act. The type and limits for such a guarantee should be fixed by international agreement. In the event of an arbitrary exercise of the limited jurisdiction by a Coastal State or an exercise without reasonable cause, the vessel owner, cargo owner, State of registry of the vessel, or State of nationality of the cargo owner, should have a right to appeal the dispute to the international disputes settlement procedures with a claim for damages for any injury as a result of such exercise of jurisdiction. The treaty should affirm the principle of Flag State enforcement with respect to areas beyond those in which the treaty grants enforcement jurisdiction to the Coastal State. However, when in the view of the appropriate international organization, circumstances warrant, it should be empowered to delegate supplementary jurisdiction to enforce the internationally agreed standards, to any appropriate Coastal State. This delegation of supplementary enforcement jurisdiction should be on an ad hoc basis and should also be subject to compulsory dispute settlement. * In special circum- * Of course internationally agreed sta ndards designed both to assure pollution control and sa fety of navigation should provide for continuing the existing procedures for mainte na nce and upkeep of the vessel and its fa cilitie s. Inspections to assure compliance should be carried out in the locale which would be most economical under the circumstances. stances, when regional organizations are created for pollution control and are given delegated enforcement rights, such organizations should assure adequate representation for user States as well as Coastal States in the region. 2. Seabed Pollution Control Standards and Their Enforcement (a) Jurisdiction to prescribe standards of conduct relating to pollution from seabed resource exploitation on the continental margin, including necessary pipeline and terminal operations, should be vested in the adjacent Coastal State, but the appropriate international organization should have authority to prescribe standards which the Coastal State may raise but not lower in order to protect the interests of all States in the marine environment. (b) Jurisdiction to enforce such standards should be vested in the adjacent Coastal State having jurisdiction to prescribe them. 3. Settlement of Pollution Control Disputes t In the event of a dispute involving the application of pollution control standards or regulations established by or under the Convention, it should provide appropriate procedures and institutions, as set forth in Chapter Five, to: (a) Review compliance by a State with its Convention obligations upon the complaint of any other party State; (b) Hear and decide disputes as provided for in Chapter Five with respect to pollution under the Convention involving any party State or international organization; and (c) Issue, in connection with the preceding paragraph, such interim orders as may be necessary to prevent injustices pending consideration and resolution of such disputes. t See Chapter Five, "Settlement of Disputes." 33

42

43 CHAPTER FOUR ACCOMMODATION OF USES A. Complexity of Multiple Use of the Marine Environment Experience to date does not indicate that diverse uses of the ocean environment will give rise to serious conflict among them. Nevertheless, the National Petroleum Council believes it should express the admonition that any such lawful use must be conducted consistently with other lawful uses within the ocean area. As technology advances and ocean area uses become more extgnsive and intensive, some degree of conflict among uses might well develop. The harmonization of all uses of the ocean area, including mineral resource development of the seabed, will be of increasing complexity as Coastal States exercise resource development jurisdiction over the seabed in areas at considerable distance seaward of the territorial sea-particularly as international rights are exercised in the ocean above these seabeds. Among the more important uses of the marine environment are: Aesthetics Communication including submarine cables Fishing Mineral resource exploitation, both hydrocarbons and hard minerals National defense Navigation on the oceans Nuclear energy generating plants Recreation Scientific research Transport facilities such as superports and airports Underwater gathering and trunk pipelines Underwater storage. As anticipated requirements for increased petroleum imports rise rapidly for consumer countries, offshore superports to handle very large crude oil tankers will be a necessity in some parts of the world where there are no natural deepwater ports. As a matter of fact, for economical importation of large quantities of crude oil, offshore manmade superports will be a "must" for the United States since its coasts do not offer natural deepwater harbors. Constructed perhaps 20 miles or more offshore, these superports will require underwater pipelines to storage and handling facilities onshore. Both the superports and their ancillary facilities must be constructed and operated without causing conflict with other lawful uses of the area, particularly navigation. Environmental considerations must also be taken carefully into account in the construction and operation of such facilities. The international designation of mandatory traffic safety patterns, including establishing traffic separation freeways 35

44 and requiring shipping to comply therewith, will minimize conflict between the presence and operation of a superport and navigation of vessels in the area. Experience with offshore petroleum exploration and producing operations has demonstrated that fish catch in the area is not adversely affected. B. Recommendations The National Petroleum Council recommends that: 1. The international authority or a commission established under the Convention have responsibility for developing standards and criteria for utilization in resolving conflicts among uses and that close consultation with Coastal States be maintained in this process; 2. In the event of conflict among uses in the marine area involving rights and obligations under the Convention or under general rules of international law, the procedures and institutions provided for in the Convention be resorted to in order to reach accommodation. 36

45 CHAPTER FIVE SETTLEMENT OF DISPUTES It is inevitable that the overlapping interests of Coastal States and the international community in offshore areas will from time to time result in conflicts and disputes. The concern of all governments with maintaining harmonious activity in such areas compels the establishment of dispute settlement procedures that are efficient impartial and effective. A. Law of the Sea Convention Facilities The recommendations made here regarding such procedures are predicated upon the establishment of an international organization that will have facilities for the adoption and promulgation of rules and standards governing navigation in offshore areas, the control of pollution from vessels, seabed activities, pipelines and terminals, the protection of investments and the accommodation of different uses. Such facilities might consist of or include a commission or commissions composed of experts appointed pursuant to the Law of the Sea Convention which, in addition to having the power to develop rules and practices, would also be empowered to deal with administration of the deep seabed area and with conflicts and disputes. The Convention should also provide procedures for the judicial settlement of disputes regarding interpretations of the Convention, as well as those otherwise arising between governments, between governments and the organization, and between private parties and governments or the organization. In the first instance, a commission of experts or a dispute settlement chamber thereof might appropriately act as a mediator or conciliator or, if the organization were itself a party to the dispute, it might arrange for third party mediation or conciliation. In any event if time permits, there should be a period for negotiation in which a good faith effort would be required by all concerned to reach a solution. The Convention on International Civil Aviation is precedent for requiring negotiation, but it would appear essential, if any such provision were adopted, that some time limit should be specified. Apart from the negotiation, mediation or conciliation of disputes as a means of settlement, it is essential that, where these fail to provide a solution within a reasonable time, procedures be prescribed for compulsory impartial adjudication. The adjudicating authority should also be empowered to order interim measures where n~cessary to prevent immediate injury due to interference with the movements of vessels and their cargoes. Similarly, interim orders may be necessary in emergency situations to prevent accidents or imminent harm to the marine environment. 37

46 Broad areas of disputes likely to arise and requiring international adjudication are: (l) those relating to the operation of vessels, (2) those involving the exercise of rights to prevent or recover damages for pollution, (3) those relating to the protection of investments in ocean areas, (4) those relating to deepsea mining operations, and (5) those arising out of claimed interferences with other international rights and freedoms. In some cases the disputes may be between two or more governments or between a government and an international authority. In other cases, the primary parties concerned on one side of a dispute may be private vessel owners or operators, private offshore operators, private investors, or other private users of the marine area. To require that in all instances private interests be represented by their governments where they claim redress for some injury would be retrogressive and would frustrate the objectives of the treaty. It is particularly essential that private parties have immediate access to adjudicating procedures where emergency measures are required. While it is recognized that compulsory procedures may be difficult to negotiate in a Law of the Sea Conference, the alternative of recognizing certain Coastal State rights in broad areas beyond the territorial sea without measures for settling disputes arising from the exercise of such rights would be contrary to the interest of all countries which are concerned with the unimpeded movement of vessels through the oceans, pollution control and the harmonization of uses in offshore areas. This is clearly the position taken by the United States, as evidenced by Mr. Stevenson's statement on August 10, 1972, that "the principle of compulsory dispute settlement is essentia1." * In its draft Convention on the Inter- * Appendix C, Statement of Mr. John R. Stevenson. national Seabed Area, submitted as a working paper, the United States proposed a tribunal to be composed of "five, seven, or nine independent judges," representing "the principal legal systems of the world/' and appointed by the Council of the proposed International Seabed Authority from candidates nominated by the Contracting Parties.t Such a tribunal would decide "all disputes and advise on all questions relating to the interpretation and application" of the Convention submitted to it in accordance with the provisions of the Convention. Under this draft, the Council would be composed of 24 Contracting Parties of which 6 would be the most industrially advanced and of which 18 (to include at least 12 developing countries) would be elected by the Assembly, taking into account the need for equitable geographic distribution. All decisions, including the appointment of the judges, would require approval by a majority of each category, that is, a majority of the 6 most industrially advanced and a majority of the remaining 18. B. Disputes Between States and With International Organizations For the purposes of settling disputes between States and those between States and the international organization involving issues of state as such, including disputes relating to the interpretation and application of the Convention, such a tribunal should be suitable, provided that the balance proposed in the U.S. draft is maintained. If it is not, compulsory arbitration should be proposed. Where questions of a technical nature are involved-such as compliance with technical standards or specifications, navigational issues, and those relating to pollution-reference to a commission of experts, whose appointment would be governed by the same procedures as those applicable to the appointment of tu.n. Doc. A/ AC.l38/25 (August 3,1970). 38

47 judges, would be more appropriate for the purpose of obtaining recommendations on technical issues. Such recommendations could then be referred with legal issues to the tribunal or to arbitration for adjudication. In this connection, it is noted that in the draft Fisheries Article submitted by the United States to the U.N. Seabed Committee, provision is made for a Commission of five members to settle disputes arising under that Article. * Such a procedure might be followed in relation to disputes of a technical nature as outlined above. However, arbitration by a threemember tribunal would appear just as appropriate, and probably more efficient, particularly if hearings have been held before a conciliation or mediation commission or the issues thoroughly explored by negotiation. c. Disputes Involving Private Parties In the case of disputes between private parties, on the one hand, and States or the international organization on the other, including investment disputes, the members of the tribunal or commission should be appointed by the parties or, where they cannot agree on an appointment, by an independent appointing authority. The Rules of the Permanent Court of Arbitration, which were amended in 1962 to provide for arbitration and conciliation between two parties of which only one is a State, would provide a suitable framework for this, and they have the advantage of being well established and administered by a secretariatt To facilitate the appointment of arbitrators under such rules, where the parties cannot themselves agree, it would be appro- U.N. Doc. A I AC.1 38/ SC.II/ L.9 (August 4, 1972). t "Rules of Arbitration and Conciliation for Settlement of International Disputes Between Two Parties of Which Only One Is a State," American Journal of International Law (official document of the Permanent Court of Arbitration), Vol. 57 (1963), p priate for the States which are parties to the Law of the Sea Convention to appoint experts to panels from which selections could be made by the Secretary General of the Permanent Court of Arbitration. Because interference with shipping, including delays, may be very costly to the owners of vessels and cargoes and even vital to those countries dependent on shipping for their supplies, it is recommended that the tribunal, commission or other appropriate authority be empowered to issue emergency orders to free vessels and cargoes which may have been seized by Coastal States, without prejudice to later negotiation, mediation, conciliation or adjudication of the issues involved. Such an authority could be empowered to issue interim orders upon application of any party to the dispute, private or public, against the posting of a bond or other security. States party to the Convention should undertake to enforce such orders in their own municipal legal systems and should be bound to provide emergency procedures under their own municipal laws for the prompt release of vessels and cargoes against the furnishing of security. D. Conclusions and Recommendations Procedures and institutions for the peaceful and objective resolution of disputes are fundamental to an orderly society. This is no less true in the international community than in the domestic. A community that does not accept peaceful and objective settlement of disputes cannot be considered as having accepted the rule of law. The complexity and multiplicity of uses of the sea and seabed beneath it, even under the best of intentions and practices, will give rise to serious disputes between States themselves, between a State and a private party user, and with the International Seabed Authority. Such disputes, if not subject to peace- 39

48 ful and objective settlement with accepted legal standards for decision, may well develop needlessly into threats to the peace among nations. The National Petroleum Council recommends that the U.S. Government maintain its strong position requiring that a Law of the Sea Convention provide procedures and institutions for the peaceful and objective settlement of any dispute arising as to the interpretation of provisions of the Convention or a dispute involving uses of the sea or seabeds, whether between States themselves, a State and a private person of another State, or with an international organization. It is recommended that the United States urge the following: 1. All disputes arising under the Convention or its application should be subject to compulsory dispute settlement. 2. Whatever international authority is established by the Convention should contain an expert commission or commissions with powers to review and make recommendations for the settlement of disputes of a technical nature, such recommendations as to technical issues which are not accepted by the parties to be submitted to the adjudicating authority under 3 or 4 below. 3. Subject to adoption of the proposals in the U.S. draft Convention relating to the composition of the Council and the appointment of members of the tribunal, or proposals substantially similar, a separate tribunal should be provided in the Convention with competence to decide on a legal basis disputes of a State nature arising under the treaty between States or between a State and an international organization, and to which private parties will have a right to apply for emergency measures and for the settlement of disputes between them and an international organization or between them and States. 4. In cases involving disputes between a State and a private party or between an international organization and a private party, and also in cases of disputes between States or between a State and an international organization where the U.S. proposals referred to in 3 above, or substantially similar proposals, are not adopted, provision should be made for resort to adjudication by a tribunal established under the Rules of the Permanent Court of Arbitration. 5. In matters requiring emergency action, including that of an interim nature, there should be procedures and institutions available to private parties for immediate relief pending final resolution of the dispute. Such institutions could include expert commissions for various uses or the Secretariat itself or its designee for the purpose involved. 40

49 Dear Mr. True: APPENDICES United States Department of the Interior Office of the Secretary Washington, D.C Appendix A September IS, 1972 On behalf of the Secretary of the Interior I wish to express our appreciation for the 1971 Supplemental Report on Petroleum Resources under the Ocean Floor prepared by the National Petroleum Council in response to a request from the Department of the Interior. Your analysis and comments on the U.S. draft convention and appendices were indeed helpful. In particular, the discussion provided on Articles 26 and 73 was of significant interest to us. In order to assist the Department of the Interior in the continuing preparation for the scheduled 1973 Law of the Sea Conference, the National Petroleum Council is requested to prepare a further study which should consider the question of navigation in coastal waters and international straits and the question of security of investment in overseas and domestic offshore areas. In conjunction with the latter, it would be helpful if special attention could be paid to the issue of compulsory settlement of disputes. In view of the increasing dependence of the United States on imported energy we must be increasingly alert to possibilities for reducing that dependence or stabilizing the conditions under which foreign petroleum liquids and gas are produced and exported to the United States. In this connection, the U.S. Representative to the United Nations Seabeds Committee on August 10, 1972, advised the United Nations that it is essential that coastal state jurisdiction over mineral resources of the continental margins be subject to international standards, including navigation in coastal areas, pollution prevention, protection for the integrity of investments and the compulsory settlement of disputes. The United States believes that these international standards will in part contribute to our energy posture by creating more stable and secure investment conditions. The advice of the National Petroleum Council is requested on whether these standards are adequate to meet these objectives. If they are considered to be adequate, we would appreciate your suggestions for amplifying upon them and, if possible, alternatives which might improve our energy posture with equal effectiveness. Once again, we were most appreciative of the valuable information and recommendations contained in the 1969 and 1971 Council reports on seabed resource development. We are hopeful that you will be able to provide your views and comments on these matters and on others which you may deem relevant. An interim report by December 1972 would be particularly timely. We look forward to your continued assistance in this.matter. Mr. H. A. True, Jr. Chairman National Petroleum Council 1625 "K" Street, N.W. Suite 601 Washington, D.C Sincerely yours, Hollis M. Dole Assistant Secretary Mineral Resources 41

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51 Appendix B National Petroleum Council Committee on Petroleum Resources Under the Ocean Floor Chairman Wilton E. Scott Chairman of the Board Tenneco Oil Company Cochairman Secretary Stephen A. Wakefield Assistant Secretary for Energy and Minerals U.S. Department of the Interior * * Vincent M. Brown Executive Director National Petroleum Council * Robert O. Anderson Chairman of the Board Atlantic Richfield Company John M. Kelly Independent Operator Washington, D.C. H. Bridges President Shell Oil Company B. R. Dorsey Chairman of the Board Gulf Oil Corporation Ford M. Graham Chairman of the Board The Louisiana Land and Exploration Company Maurice F. Granville Chairman of the Board Texaco Inc. Fred L. Hartley President Union Oil Company of California J. K. Jamieson Chairman of the Board Exxon Corporation Walter J. Levy New York, New York Harold M. McClure, JI. President McClure Oil Company D. A. McGee Chairman of the Board Kerr-McGee Corporation John G. McLean Chairman of the Board Continental Oil Company O. N. Miller Chairman of the Board Standard Oil Company of California Charles H. Murphy, JI. Chairman of the Board Murphy Oil Corporation W. M. Vaughey Vaughey and Vaughey W. W. Keeler Director Phillips Petroleum Company Rawleigh Warner, JI. Chairman of the Board Mobil Oil Corporation 43

52 Cochairman Technical Subcommittee of the National Petroleum Council's Committee on Petroleum Resources Under the Ocean Floor Leigh S. Ratiner Director for Ocean Resources Office of the Assistant Secretary for Energy and Minerals U.S. Department of the Interior George T. Ballou Vice President, Public Affairs Standard Oil Company of California Chairman Dr. Hollis D. Hedberg Exploration Advisor Gulf Oil Corporation * Secretary Maxwell S. McKnight Director Marine Resources National Petroleum Council * * Cecil J. Olmstead Vice President Texaco Inc. George A. Birrell General Counsel Mobil Oil Corporation W. A. Bramlette Executive Vice President Esso Production Research Company Melvin A. Conant Senior Advisor, Public Affairs Exxon Corporation N. G. Dumbros, Vice President Industry and Public Affairs Marathon Oil Company Northcutt Ely Washington, D.C. Luke W. Finlay New York, New York John M. Kelly Independent Operator Washington, D.C. J. P. Malott Vice President for Production North American Petroleum Operations Continental Oil Company George B. Parks President Transworld Drilling Company W. A. Roberts Executive Vice President Phillips Petroleum Company Lewis A. Rupp Manager Offshore Production Research Program Field Research Laboratory Mobil Research and Development Corporation John E. Sherborne Associate Director of Research Exploration and Production Research Union Research Center Union Oil Company of California C. H. Siebenhausen, JI. Production Manager Shell Oil Company Oliver L. Stone Vice President and General Counsel Shell Oil Company 44

53 Technical Subcommittee of the National Petroleum Council's Committee on Petroleum Resources Under the Ocean Floor Legal Task Force Chairman Cecil J. Olmstead Vice President Texaco Inc. Secretary Maxwell S. McKnight Director, Marine Resources National Petroleum Council * * * George A. Birrell General Counsel Mobil Oil Corporation W. C. Brodhead Vice President, Marine Department Gulf Oil Corporation Melvin A. Conant Senior Advisor, Public Affairs Exxon Corporation Northcutt Ely Washington, D.C. Luke W. Finlay New York, New York Howard R. Gould Research Scientist Esso Production Research Company G. Winthrop Haight New York, New York William J. Martin, Jr. Pillsbury, Madison and Sutro James D. Parriott, Jr. Director, Public Affairs Marathon Oil Company Oliver L. Stone Vice President and General Counsel Shell Oil Company 45

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55 Appendix C United States Mission U.S. Information Service 80, Rue De Lausanne 1211 Geneva 21-Tel Statement by the Honorable John R. Stevenson United States Representative to the Committee on the Peaceful Uses of the Seabed and the Ocean Floor Beyond the Limits of National Jurisdiction Plenary, August 10, 1972 Mr. Chairman: In recent weeks, both you and your colleagues on the Bureau have emphasized that this is a critical session for the United Nations Seabed Committee. We agree. Therefore, we believe it is appropriate to consider the future of these negotiations and, in that context, the future of the Law of the Sea. It is over two years since President Nixon said: The stark fact is that the law of the sea is inadequate to meet the needs of modern technology and the concerns of the international community. If it is not modernized multilaterally, unilateral action and international conflict are inevitable. Mr. Chairman, if we are to find negotiated, international solutions to the law of the sea, we must do two things promptly. First, we must all be prepared to accommodate each other's interests and needs. We are preparing a comprehensive law-making treaty to govern not only the conduct of sovereign States and private persons in the ocean, but also the natural resources of an area comprising two-thirds of the earth's surface. Its effectiveness will depend in large measure on the extent to which it represents a consensus of all, rather than a group of States. To achieve this, we must identify those national interests that are of fundamental importance to each of us, and avoid time-consuming and potentially divisive debate on less important matters. Second, we must achieve agreement before events overtake our ability to do so. I cannot stress too strongly that none of us can or should stop technology and its use. If we act wisely and in a timely manner, we can ensure by agreement that the technology will be used in a manner that provides maximum benefit for all mankind. Our efforts here, Mr. Chairman, are known to many people in my own country and in many others represented here today. The people who use the seas, and the people whose livelihoods either now or in the future depend on the sea, are watching us. In the United States there is a growing uneasiness about our work. Most Americans concerned with the sea are dedicated to multilateral solutions to problems which have international ramifications, but they are becoming increasingly skeptical about the chances for success. Other delegations here may perceive similar developments taking place in their own countries. We must not allow confidence to be shaken in our ability to negotiate timely solutions to the problems we face. Against this background, I would like to comment on some aspects of the substance of these negotiations. Ocean uses can be divided into two broad categories: Resource uses and non-resource uses. The first group principally concerns fishing and seabed re- 47

56 sources. The non-resource uses include such important interests as navigation and overflight, scientific research and the preservation of the ocean environment. The view of my delegation on nonresource uses have been clearly stated on a number of occasions. It is our candid assessment that there is no possibility for agreement on a breadth of the territorial sea other than 12 nautical miles. The United States and others have also made it clear,that their vital interests require that agreement on a 12-mile territorial sea be coupled with agreement on free transit of straits used for international navigation and these remain basic elements of our national policy which we will not sacrifice. We have, however, made clear that we are prepared to accommodate coastal State concerns regarding pollution and navigational safety in straits and have made proposals to that effect in Subcommittee II. The views of my delegation on resource issues have also been stated on a number of occasions. Unfortunately, some delegations appear to have the impression that maritime countries in general, and the United States in particular, can be expected to sacrifice in these negotiations basic elements of their national policy on resources. This is not true. The reality is that every nation represented here has basic interests in both resource and non-resource uses that require accommodation. Accordingly, we believe it is important to dispel any possible misconceptions that my government would agree to a monopoly by an international operating agency over deep seabed exploitation or to any type of economic zone that does not accommodate basic United States interests with respect to resources as well as navigation. I would like to amplify this point with a few remarks on some of these basic elements, Coastal Resources Generally Mr. Chairman, in order to achieve agreement, we are prepared to agree to broad coastal State economic jurisdiction in adjacent waters and seabed areas beyond the territorial sea as part of an overall law of the sea settlement. However, the jurisdiction of the coastal State to manage the resources in these areas must be tempered by international standards which will offer reasonable prospects that the interests of other States and the international community will be protected. It is essential that coastal State jurisdiction over fisheries and over the mineral resources of the continental margins be subject to international standards and compulsory settlement of disputes. Seabed Resources-Coastal Areas We can accept virtually complete coastal State resource management jurisdiction over resources in adjacent seabed areas if this jurisdiction is subject to international treaty limitations in five respects: 1. International treaty standards,to prevent unreasonable interference with other uses of the ocean. A settlement based on combining coastal State resource management jurisdiction with protection of non-resource uses can only be effective if the different uses are accommodated. This requires internationally agreed standards pursuant to which the coastal State will ensure, subject to compulsory dispute settlement, that there is no unreasonable interference with navigation overflight and other uses. 2. International treaty standards to protect the ocean from pollution. As a coastal State, we do not wish to suffer pollution of the oceans from seabed activities anywhere. We consider it basic that minimum internationally agreed pollution standards apply even to areas in which the coastal State enjoys resource jurisdiction. 48

57 3. International treaty standards to protect the integrity of investment. When a coastal State permits foreign nationals to make investment in areas under its resource management jurisdiction, the integrity of such investments should be protected by the treaty. Security of tenure and a stable investment climate should attract foreign investment and technology to areas managed by developing coastal States. Without such protection in the treaty, investment may well go elsewhere. 4. Sharing of revenues for international community purposes. We continue to believe that the equitable distribution of benefits from the seabeds can best be assured if treaty standards provide for sharing some of the revenues from continental margin minerals with the international community, particularly for the benefit of developing countries. Coastal States in a particular region should not bear the entire burden of assuring equitable treatment for the landlocked and shelf-locked States in that region, nor should they bear the entire burden for States with narrow shelves and little petroleum potential off their coast. The problem is international and the best solution would be international. We repeat this offer as part of an overall settlement despite our conclusion from previous exploitation patterns that a significant portion of the total international revenues will come from the continental margin off the United States in early years. Weare concerned about the opposition to this idea implicit in the position of those advocating an exclusive economic zone. 5. Compulsory settlement of disputes. International standards such as those I described are necessary to protect certain non-coastal and international interests, and thus render agreement possible. Accordingly, effective assurances that the standards will be observed is a key element in achieving agreement. Adequate assurance can only be provided by an impartial procedure for the settlement of disputes. These disputes, in the view of my delegation, must be settled ultimately by the decision of a third party. For us then the principle of compulsory dispute settlement is essential. Seabed Resources--Deep Seabeds In many respects, the deep seabeds present the newest and most exciting aspects of our work. Although we cannot agree that international law prohibits the exploitation of deep seabed resources in accordance with high seas principles, we fully share the desire to establish an equitable, internationally agreed, regime for the area and its resources as the common heritage of mankind. The sooner we do so, the earlier we will terminate essentially divisive and counter-productive disputes over the present legal status of deep seabed exploitation as well as over the position taken by some delegations, with which we have consistently disagreed, that common heritage means the common property of mankind. Our interest in the prompt establishment and effectiveness of an equitable international regime for the seabed is demonstrated both by the comprehensive draft treaty we presented two years ago and by President Nixon's statement that any prior exploitation of the deep seabed area must be "subject to the international regime to be established." The basic interests we seek to protect in an international seabed regime are reflected in the five points to which I referred earlier, coupled with our proposal for international machinery to authorize and regulate exploration and use of the resources of the area. An effective and equitable regime must protect not only the interests of the developing countries but also those of the developed countries by establishing reasonable and secure investment conditions for their nationals who will invest their capital and technology in the deep sea- 49

58 beds. In order to provide the necessary protections for all nations with important interests in the area, it is also necessary to establish a system of decision making which takes this into account and provides for compulsory settlement of disputes. We do not regard these objectives as inconsistent with the desire of other countries for equitable participation in deep seabed exploitation and its benefits. Finally, Mr. Chairman, it is our view that the benefits to be derived from the operation of this new treaty should only be made available to those nations who are prepared to ratify or accede to it. Those benefits, as all of us in this room know, are manifold. New technology for mining in the seabeds is rapidly opening up new prospects for important mineral supplies. As development proceeds, vast new ideas will emerge as man begins the serious exploration of the ocean and its resources. Mining in the oceans will generate revenues as well. All these benefits, Mr. Chairman, should be shared. We are capable in this Committee of making the decisions which will enable these benefits to be realized, but we must get about the business of making these decisions promptly or we will be precluded from doing so. Fisheries With respect to fisheries, our basic interest is to assure rational use and conservation of all fish stocks. To achieve this, we belive coastal States should have substantial jurisdiction over all fisheries, including anadromous species, except where the migratory habits of certain fish stocks dictate another system-for example, the highly migratory tuna should be managed pursuant to multilateral arrangements. In coastal areas jurisdiction should be limited by such international standards as would assure conservation and full utilization of the living resources. It is widely understood that the United States shares the interests of many other coastal States. However, the fact that over 80'1'0 of our fisheries are off our own coast does not mean that we are prepared to abandon the remaining 20% the distant-water segment of our industry. There are reasonable ways to accommodate the interests of both coastal and distant-water fishing States and to assure the kind of special cooperation between States in a region that many delegations have urged. We believe that a solution of the fisheries problem should take into account the migratory habits of fish and the manner in which they are fished. Thus, we can support broad coastal State jurisdiction over coastal and anadromous fisheries beyond the territorial sea subject to international standards designed to ensure conservation, maximum utilization and equitable allocation of fisheries, with compulsory dispute settlement, but with international regulation of highly migratory species such as tuna. Our detailed proposals on this matter have been elaborated further in Subcommittee II. The proposals reflect our continuing belief that both sound conservation and rational utilization must take into account the biology and distribution of living marine resources. But they also respond to the expressed desire of coastal States for direct regulatory authority and preferential rights over coastal and anadromous fisheries. However, it is fundamental that fish stocks must be conserved, and that there must be maximum utilization of stocks not fully utilized by local fishermen. Moreover, account should be taken of traditional fishing activities of other nations, as well as the desire of States to enter into special arrangements with their neighbors. We remain convinced that highly migratory oceanic species can only be properly regulated through international organizations. It is our hope that our new proposals will move the Committee closer to a solution to the complex fisheries problems involved. 50

59 Conclusion are otherwise widely disparate positions. Perhaps then the very beginnings of an Mr. Chairmant I would like to conclude my statement with some general come the basis for a successful 1973 Con outline might emerge which could be comments. While my delegation must ference. I hope SOt Mr. Chairman. confess its disappointment in our progress to datet we must also point out those Subcommittee 1. We have given priority Another source or hope is the work of areas where we believe important progress has been made. are beginning to see not only concrete to the negotiation of the regime and we Looked at from a broad perspective. results but an open and constructive we see various signs that make us cautiouslyoptimistic. It is clear that the negoguished representative of the Cameroont negotiating atmosphere. The distintiating positions of various States are Chairman of the First Subcommittee, and now substantially closer together than your distinguished colleague from Sri their juridical positions. This is particularly the case with respect to the width have through their tireless efforts helped Lankat Chairman of the Working GrouPt of the territorial sea and coastal State break new ground in this Committee jurisdiction over resources beyond the which makes us believe that where there territorial sea. is political wilt our negotiations will bear Mr. Chairmant I welcomed the interesting reports of the distinguished rep This new political wilt howevert must fruit. resentatives of Venezuela and Kenya infuse our work in the other subcommittees as well and it must occur now. The on the results of the Santo Domingo Conference of Caribbean States and the lllise must be disposed of and work begun on the drafting of articles. We are Yaounde Seminar of African countries. While applauding their contribution to confident, Mr. Chairmant that once such the continuing development of a generally acceptable agreement, I should successful conference will be within our work begins it will move rapidly and a point out they do not fully take into account a number of the factors I have dismant we wonder if a successful confer grasp. But if we wait longer, Mr. Chaircussed earlier in this statement. I note ence will ever be possible. Let us all begin to work now to avoid such a tragedy. in particular the absence of any reference to international standards and dispute settlement procedures applicable want to express to you the sincere appre Finally in closing, Mr. Chairman, I to coastal State resource jurisdiction and ciation of my delegation for your wisdomt of any distinction in the treatment of living resources based on their migratory what we hope will be one of the most guidance and firm leadership through characteristics. Howevert these documents certainly provide a starting point have taken place in our times. We wish important and successful negotiations to for serious negotiations and, if harmonized with my own delegation's statement and will give you all our support. you continued success at this endeavor todayt there might be a potential for Thank YOU t Mr. Chairman. merging together in a new treaty what * * * 51

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61 List of Subjects and Issues Relating to the Law of the Sea * Approved by the U.N. Seabed Committee On August Appendix D 1. International regime for the sea-bed and the ocean floor beyond national jurisdiction 1.1 Nature and characteristics 1.2 International machinery: structure, functions, powers Economic implications Equitable sharing of benefits bearing in mind the special interests and needs of the developing countries, whether coastal or landlocked Definition and limits of the areat Use exclusively for peaceful purposes 2. Territorial sea 2.1 Nature and characteristics, including the question of the unity or plurality of regimes in the territorial sea Historic waters Limits Question of the delimitation of the territorial sea; various aspects involved Breadth of the territorial sea, Global or regional criteria. Open seas and oceans, semiclosed seas and enclosed seas Innocent passage in the territorial sea Freedom of navigation and overflight resulting from the question of plurality of regimes in the territorial sea * U.N. Doc. Supp. No. 21 (A/8721, pp. 4-8). t To be considered in the light of the procedural agreement as set out in paragraph 22 of the report of the Committee (Official records of the General Assembly, Twenty-Sixth Session, Supplement No. 21 [A/8421J). 3. Contiguous zone 3.1 Nature and characteristics 3.2 Limits 3.3 Rights of coastal States with regard to national security, customs and fiscal control, sanitation and immigration regulations 4. Straits used for international navigation 4.1 Innocent passage 4.2 Other related matters including the question of the right of transit 5. Continental shelf 5.1 Nature and scope of the sovereign rights of coastal States over the continental shelf. Duties of States 5.2 Outer limit of the continental shelf: applicable criteria 5.3 Question of the delimitation between States; various aspects involved 5.4 Natural resources of the continental shelf 5.5 Regime for waters superjacent to the continental shelf 5.6 Scientific research 6. Exclusive economic zone beyond the territorial sea 6.1 Nature and characteristics, including rights and jurisdiction of coastal States in relation to resources, pollution control and scientific research in the zone. Duties of States Resources of the zone Freedom of navigation and overflight 53

62 6.4 Regional arrangements 6.5 Limits: applicable criteria 6.6 Fisheries Exclusive fishery zone Preferential rights of coastal States Management and conservation Protection of coastal States' fisheries in enclosed and semi-enclosed seas Regime of islands under foreign domination and control in relation to zones of exclusive fishing jurisdiction 6.7 Sea-bed within national jurisdiction Nature and characteristics Delineation between adjacent and opposite States Sovereign rights over natural resources Limits: applicable criteria 6.8 Prevention and control of pollution and other hazards to the marine environment Rights and responsibilities of coastal States 6.9 Scientific research 7. Coastal State preferential rights or other non-exclusive jurisdiction over resources beyond the territorial sea 7.1 Nature, scope and characteristics 7.2 Sea-bed resources 7.3 Fisheries 7.4 Prevention and control of pollution and other hazards to the marine environment 7.5 International co-operation in the study and rational exploitation of marine resources 7.6 Settlement of disputes 7.7 Other rights and obligations 8. High seas 8.1 Nature and characteristics 8.2 Rights and duties of States 8.3 Question of the freedoms of the high seas and their regulation 8.4 Management and conservation of living resources 8.5 Slavery, piracy, drugs 8.6 Hot pursuit 9. Land-locked countries 9.1 General Principles of the Law of the Sea concerning the land-locked countries 9.2 Rights and interests of landlocked countries Free access to and from the sea: freedom of transit, means and facilities for transport and communications Equality of treatment in the ports of transit States Free access to the international sea-bed area beyond national jurisdiction Participation in the international regime, including the machinery and the equitable sharing in the benefits of the area 9.3 Particular interests andneeds of developing land-locked countries in the international regime 9.4 Rights and interests of landlocked countries in regard to living resources of the sea 10. Rights and interests of shelf-locked States and States with narrow shelves or short coastlines 10.1 International regime 10.2 Fisheries 10.3 Special interests and needs of developing shelf-locked States and States with narrow shelves or short coastlines 10.4 Free access to and from the high seas 11. Rights and interests of States with broad shelves 54

63 12. Preservation of the marine environment 12.1 Sources of pollution and other hazards and measures to combat them 12.2 Measures to preserve the ecological balance of the marine environment 12.3 Responsibility and liability for damage to the marine environment and to the coastal State 12.4 Rights and duties of coastal States 12.5 International cooperation 13. Scientific research 13.1 Nature t characteristics and objectives of scientific research of the oceans 13.2 Access to scientific information 13.3 International cooperation 14. Development and transfer of technology 14.1 Development of technological capabilities of developing countries Sharing of knowledge and technology between developed and developing countries Training of personnel from developing countries Transfer of technology to developing countries Regional arrangements Archipelagos 17. Enclosed and semi-enclosed seas 18. Artificial islands and installations 19. Regime of islands: (a) Islands under colonial dependence or foreign domination or control; (b) Other related matters 20. Responsibility and liability for damage resulting from the use of the marine environment Settlement of disputes Peaceful uses of the ocean space; zones of peace and security 23. Archaeological and historical treasures on the sea-bed and ocean floor beyond the limits of national jurisdiction 24. Transmission from the high seas 25. Enhancing the universal participation of States in multilateral conventions relating to the law of the sea. 55

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65 Appendix E General Principles for Assessment and Control of Marine Pollution Proposed by the Intergovernmental Working Group on Marine Pollution (November 1971) and endorsed by the Stockholm Conference on the Human Environment (June 1972) * A set of general principles for assessment and control of marine pollution should be accepted and endorsed by Governments. The definition of marine pollution employed by the United Nations is lithe introduction by man, directly or indirectly, of substances or energy into the marine environment (including estuaries) resulting in such deleterious effects as harm to living resources, hazards to human health, hindrance to marine activities including fishing, impairment of quality for use of sea water, and reduction of amenities.ii The following principles were suggested by the Intergovernmental Working Group on Marine Pollution (November 1971) as guiding concepts representing a basis for general agreement. 0) Every State has a duty to protect and preserve the marine environment and, in particular, to prevent pollution that may affect areas where an internationally shared resource is located. (2) Every State should adopt appropriate measures for the prevention of marine pollution, whether acting individually or in conjunction with other States under agreed international arrangements. (3) States should use the best practicable means available to them to minimize the discharge of potentially hazardous substances to the sea by all routes, including land-based sources such as rivers, outfalls and pipelines within national jurisdiction, as well as U.N. Doc. A/ CONF.48/14, Annex III. July dumping by or from ships, aircraft and platforms. (4) States should ensure that their national legislation provides adequate sanctions against those who infringe existing regulations on marine pollution. (5) States should assume joint responsibility for the preservation of the marine environment beyond the limits of national jurisdiction. (6) The States at higher levels of technological and scientific development should assist those nations which request it, for example by undertaking programs, either directly or through competent agencies, intended to provide adequate training of the technical and scientific personnel of those countries, as well as by providing the equipment and facilities needed in areas such as research, administration, monitoring or surveillance, information, waste disposal, and others, which would improve their ability to discharge their duties consisting of protecting the marine environment. (7) States should discharge, in accordance with the principles of international law, their obligations towards other States where damage arises from pollution caused by their own activities or by organizations or individuals under their jurisdiction and should cooperate in developing procedures for dealing with such damage and the settlement of disputes. (8) Every State should co-operate with other States and competent international organizations with regard to the elaboration and implementation of internationally agreed rules, standards and procedures for the prevention of marine pol- 57

66 lution on global, regional and national levels. (9) States should join together regionally to concert their policies and adopt measures in common to prevent the pollution of the areas which, for geographical or ecological reasons, form a natural entity and an integrated whole. (0) International guidelines and criteria should be developed, both by national Governments and through intergovernmental agencies, to provide the policy framework for control measures. A comprehensive plan for the protection of the marine environment should provide for the identification of critical pollutants and their pathways and sources, determination of exposures to these pollutants and assessment of the risks they pose, timely detection of undesirable trends, and development of detection and monitoring systems. (1) Internationally agreed criteria and standards should provide for regional and local variations in the effects of pollution and in the evaluation of these effects. Such variables should also include the ecology of sea areas, economic and social conditions, and amenities, recreational facilities and other uses of the seas. (12) Primary protection standards and derived working levels-especially codes of practice and effluent standards-may usefully be established at national levels, and in some instances, on a regional or global basis. (3) Action to prevent and control marine pollution (particularly direct prohibitions and specific release limits) must guard against the effect of simply transferring damage or hazard from one part of the environment to another. (4) The development and implementation of control should be sufficiently flexible to reflect increasing knowledge of the marine ecosystem, pollution effects, and improvements in technological means for pollution control and to take into account the fact that a number of new and hitherto unsuspected pollutants are bound to be brought to light. OS) Every State should co-operate with other States and with competent international organizations with a view to the development of marine environmental research and survey programs and systems and means for monitoring changes, in the marine environment, including studies of the present state of the oceans, the trends of pollution effects and the exchange of data and scientific information on the marine environment. There should be similar cooperation in the exchange of technological information on means of preventing marine pollution including pollution that may arise from offshore resource exploration and exploitation. (6) International guidelines should also be developed to facilitate comparqbility in methods of detection and measurement of pollutants and their effects. (17) In addition to its responsibility for environmental protection within the limits of its territorial sea, a Coastal State. also has responsibility to protect adjacent areas of the environment from damage that may result from activities within its territory. (1 8) Coastal States should ensure that adequate and appropriate resources are available to deal with pollution incidents resulting from the exploration and exploitation of seabed resources in areas within the limits of their national jurisdiction. (19) States 'should cooperate in the appropriate international forum to ensure that activities related to the exploration and exploitation of the seabed and the ocean floor beyond the limits of national jurisdiction shall not result in pollution of the marine environment. (20) All States should ensure that vessels under their registration comply with internationally agreed rules and standards relating to ship design and con- 58

67 struction, operating procedures and other relevant factors. States should cooperate in the development of such rules, standards and procedures, in the appropriate international bodies. (21) Following an accident on the high seas which may be expected to result in major deleterious consequences from pollution or threat of pollution of the sea, a Coastal State facing grave and imminent danger to its coastline and related interests may take appropriate measures as may be necessary to prevent, mitigate, or eliminate such danger, in accordance with internationally agreed rules and standards. (22) Where there is a need for action by or through international agencies for the prevention, control or study of marine pollution, existing bodies, both within and outside the United Nations system, should be utilized as far as possible. (23) States should assist one another, to the best of their ability, in action against marine pollution of whatever origin. 59

68

69 Appendix F Straits Used by Tankers and Alternate Routes Principal Straits Used by Tankers * 1. Gulf of Aden A.-Lat. 12 OO'N Long. 46 OO'E North-Aden and Southern Yemen South-Somali C.-Draft Limits: None known (100 ft. +) D.-Width: 25 miles E.-Length: 150 miles 2. Entrance to Aegean Sea A.-Lat 'N Long. 22 E to 29 E West to East-Greece, Crete, Rodhos, Turkey C.-Draft Limits: None known 000 ft. +) D.-Width: 9 miles E.-Length: 30 miles 3. Amukta Pass A.-Lat 'N Long. 172 OO'W Aleutian Islands, Alaska, U.S.A. C.-Draft Limits: None known ODD ft. +) D.-Width: 36 miles E.-Length: 23 miles 4. Anagada Passage A.-Lat 'N Long 'W East-Various shoals and islands West-Virgin Islands C.-Draft Limits: None known (100 ft. +) D.-Width: 42 miles E.-Length: 85 miles 5. Gulf of Aqaba (Strait of Tiran) A.-Lat. 28 OO'N Long 'E * Suez Canal now closed. West-Sinai Peninsula North-Israel and Jordan East-Saudi Arabia C.-Draft Limits: None known 000 ft. +) D.-Width: 2 miles E.-Length: 10 miles 6. Bab EI Mandeb-Entrance to Red Sea A.-Lat 'N Long 'E North-Yemen and Aden South-Somali and Fr. Territory of Afars and Issus West-Ethiopia C.-Draft Limits: None known ODD ft. +) D.-Width: 9 miles E.-Length: 32 miles 7. Balabac StraiJ A.-Lat. 7 49"N Long 'E North and West-Balabac Island, Philippines South-Sabah (Borneo), Malaysia C.-Draft Limits: Narrow with numerous shoals to East. Draftnone known. D.-Width: 7 miles E.-Length: 38 miles 8. Basilan Strait A.-Lat. 6 49'N Long 'E North-Mindanao, Philippines South-Basilan Is., Philippines C.-Draft Limits: About 45 ft. Quite narrow with many shoals. D.-Width: 6.5 miles E.-Length: 44 miles 9. Bass Strait A.-Lat 'S Long. 145 OO'E 61

70 North-Australia South-Tasmania C.-Draft Limits: None known although there are some shoal areas at East end. D.-Width: 9 miles E.-Length: 260 miles 10. Bering Strait A.-Lat 'N Long OO'W East-Alaska, U.S.A. West-Siberia, U.S.S.R. C.-Draft Limits: None known ODD ft. +) D.-Width: 23 miles E.-Length: 54 miles 11. Strait of Bonifacio A.-Lat 'N Long. 9 0 lo'e North-Corsica South-Sardinia C.-Draft Limits: Draft-none known but quite narrow. D.-Width: 3 miles E.-Length: 22 miles 12. Bosporus A.-Lat 'N Long 'E Turkey C.-DraftLimits: Draft-none known. Very narrow and winding. D.-Width: 0.3 mile E.-Length: 22 miles 13. Cabot Strait A.-Lat 'N Long OO'W Northeast-Newfoundland, Can. Southwest-Cape Breton Island, Can. C.-Draft Limits: None known ODD ft. +) D.-Width: 42 miles E.-Length: 73 miles 14. Passage Between Cape Verde Islands and Africa A.-Lat OO'N Long OO'W East-Senegal West-Cape Verde Islands C.-Draft Limits: None known 000 ft. +) D.-Width: 305 miles E.-Length: 300 miles 15. Southern Entrance to Caribbean No Name A.-Lat 'N Long 'W North-Grenada Island East-Tobago Island South-Trinidad and Venezuela C.-Draft Limits: None known 000 ft. +) D.-Width: 18 miles (Tobago Island to Trinidad and Venezuela); 70.5 miles (Tobago Island to Grenada Island) E.-Length: 99 miles 16. Cook Strait A.-Lat 'S Long 'E North-North Island, New Zealand South-South Island, New Zealand C.-Draft Limits: Some shoal area in North end but basically no known limitations. D.-Width: miles E.- Length: 54 miles 17. Cuyo East Pass and Mindoro Strait A.-Lat OO'N Long OO'E Various Philippine Islands C.-Draft Limits: None known 000 ft. +) D.-Width: 17 miles E.-Length: 176 miles 18. Dardanelles A.-Lat OO'N Long 'E Turkey C.-DraftLimits: Draft-none known. Very narrow and winding. 62

71 D.-Width: 0.6 mile E.-Length: 215 miles 19. Davis Strait A.-Lat. 64 OO'N Long. 58 OO'W East-Greenland West-Baffin Island, Canada C.-Draft Limits: Ice. No known draft limit (100 ft. +) D.-Width: 172 miles E.-Length: 360 miles 20. Dominica Channel A.-Lat. 15 OO'N Long 'W North-Dominica Island South-Martinique Island C.-Draft Limits: None known 000 ft. +) D.-Width: 22 miles E.-Length: 18 miles 21. Dover Straits A.-Lat. 51 OO'N Long. 1 23'E West-England East-France C.-Draft Limits: Undetermined, about 70 ft. D.-Width: 17.5 miles E.-Length: 35 miles 22. Straits of Florida A.- Lat. 26 OO'N Long 'W East-Bahama Islands (Br.) South-Cuba West and North-Florida, U.S.A. C.-Draft Limits: None known ODD ft. +) D.-Width: 42 miles E.-Length: 100 miles 23. Formosa Strait A.-Lat 'N Long. 120 OO'E East-Taiwan West-China (Mainland) C.-Draft Limits: None known ODD ft. +) D.-Width: 67 miles E.-Length: 200 miles 24. Strait of Gibraltar A.-Lat 'N Long. 5 40'W North-Gibraltar (Br.) and Spain South-Morocco C.-Draft Limits: None known ODD ft. +) D.-Width: 8 miles E.-Length: 20 miles 25. Straits of Hormuz-Entrance to the Persian Gulf A.-Lat. 25 OO'N Long. 58 OO'E North-Iran Northeast-Pakistan South-Muscat West-Trudal States Northwest-Ru'us-Al-Jibal C.-Draft Limits: None known ODD ft. +) D.-Width: 20.6 miles E.-Length: 100 miles 26. Hudson Strait A.-Lat. 62 OO'N Long. 70 OO'W North-Baffin Island-Canada South-Canada C.-Draft Limits: Ice. No known draft limit 000 ft. +) D.-Width: 35 miles E.-Length: 285 miles 27. Korea Strait A.-Lat. 34 OO'N Long. 129 OO'E East and South- Japan Northwest-Korea C.-Draft Limits: None known 000 ft. +) D.-Width: 23 miles E.-Length: 217 miles 28. La Perouse Strait A.-Lat 'N Long. 142 OO'E North-Sakhalin Island, U.S.S.H. South-Hokkaido, Japan 63

72 C.-Draft Limits: None known (100 ft. +) D.-Width: 19 miles E.-Length: 30 miles 29. Ligurian Sea to Tyrrhenian Sea A.-Lat 'N Long. 9 50'E East-Italy West-Corsica C.-Draft Limits: None known ODD ft. +) D.-Width: 9 miles E.-Length: 60 miles 30. Lombok Straits A.-Lat. 8 40'S Long. 116 OO'E East-Lombok Island, Indonesia West-Bali Island, Indonesia C.-Draft Limits: None known ODD ft. +) D.-Width: II miles E.-Length: 35 miles 31. Luzon Strait A.-Lat. 21 OO'N Long. 121 OO'E North-Taiwan South-Luzon, Philippines C.-Draft Limits: None known (100 ft. +) D.-Width: 24 miles (Balintang Channel); 40.5 miles (Bashi Channel) E.-Length: 175 miles 32. Magellan Strait A.-Lat. 53 OD'S Long 'W North-Argentina and Chile South-Argentina and Chile C.-Draft Limits: Quite narrow at places. No known draft limit. D.-Width: I mile E.-Length: 310 miles 33. Strait of Makassar A.-Lat. 0 30'S Long 'E East-Sulawesi (Celebes), Indonesia West-Kalimantan, Borneo, Indonesia C.-Draft Limits: None known ODD ft. +) D.-Width: 45 miles E.-Length: 140 miles 34. Malacca Straits A.-Lat. 3 OO'N Long 'E North and East-Malaya, Malaysia South and West-Sumatra, Indonesia C.-Draft Limits: About 65 ft. D.-Width: 7.5 miles E.-Length: 500 miles 35. Strait of Messina A.-Lat 'N Long 'E East-Italy West-Sicily C.-Draft Limits: About 45 ft. to 50 ft. Very narrow passage. D.-Width: 1.5 miles E.-Length: 21 miles 36. Mindanao Sea and Surigao Strait A.-Lat. 10 OO'N Long. 125 OO'E Various Philippine Islands C.-Draft Limits: None known 000 ft. +) D.-Width: 8 miles E.-Length: 204 miles 37. Mocambique Channel A.-Lat. 17 OD'S Long. 42 OO'E East-Madagascar West-Mocambique C.-Draft Limits: None known 000 ft. +) D.-Width: 193 miles E.-Length: 480 miles 38. Molucca Passage A.-Lat. 1 OO'N Long. 127 OO'E East-Halmahera Island, Indonesia 64

73 West-Celebes Island, Indonesia C.-Draft Limits: None known 000 ft. +) D.-Width: 58 miles E.-Length: 165 miles 39. Mona Passage A.-Lat / N Long / W East-Puerto Rico West-Dominican Republic Middle-Mona Island C.-Draft Limits: None known 000 ft. +) D.-Width: miles E.-Length: 48 miles 40. North Channel to Irish Sea A.-Lat. 55 lo'n Long. 5 OO'W North and East-Scotland South and West-Northern Ireland C.-Draft Limits: None known 000 ft. +) D.-Width: 11 miles E.-Length: 90 miles 41. Old Bahama Channel A.-Lat / N Long 'W Northeast-Bahama Islands South and West-Cuba C.-Draft Limits: None known ODD ft. +) D.-Width: 12.5 miles E.-Length: 360 miles 42. Ombai Strait A.-Lat. 8 30'S Long. 125 OO'E Northeast-Wetar Island, Indonesia Southeast-Timor Island, Indonesia Northwest-Alor Island, Indonesia C.-Draft Limits : None known (100 ft. +) D.-Width: 16.5 miles E.-Length: 58 miles 43. Osumi Strait A.-Lat. 31 OD'N Long. 131 OD'E North-Kyushu Island, Japan South-Various Japanese Islands C.-Draft Limits: None known (100 ft. +) D.-Width: 16 miles E.-Length: 50 miles 44. Palk Strait A.-Lat. 10 OD'N Long. 80 OO'E Southeast-CeyIon Northwest-India C.-Draft Limits: None known ODD ft. +) D.-Width: 4 miles E.-Length: 108 miles 45. Persian Gulf A.-Lat. 25 OD'N Long. 52 OD'E North-Iraq Northeast and East-Iran South-Trudal States West-Qatar, Saudi Arabia, Neutral Zone, and Kuwait C.-Draft Limits: None known ODD ft. +) D.-Width: 21 miles E.-Length: 500 miles 46. Providence and Northwest Providence Channels A.-Lat 'N Long 'W North, East and South-Bahama Islands West-Florida, U.S.A. C.-Draft Limits: None known 000 ft. +) D.-Width: 26 miles E.-Length: 140 miles 47. Red Sea A.-Lat. 20 OD'N Long. 39 OD'E North-Israel held territory East-Saudi Arabia and Yemen 65

74 South-Ethiopia West-Sudan and Egypt C.-Draft Limits: None known 000 ft. +) D.-Width: 4 miles E.-Length: 1500 miles 48. Sibutu Passage A.-Lat / N Long / E Northeast- Tawitawi Islands, Philippines Southwest- Sabah (Borneo), Malaysia C.-Draft Limits: None known 000 ft. +) D.-Width: 18 miles E.-Length: 18 miles 49. Silver Bank Mouchair, Turks Is., Caicos, and Magaguana Passages A.-Lat / N to 22 OD'N Long. 70 OO'W to / W Bahama Island Chain C.-Draft Limits: None known 000 ft. +) D.-Width: 10 miles E.-Length: 62 miles 50. Strait of Sicily A.-Lat 'N Long. 12 OD'E East-Sicily Southwest-Tunisia C.-Draft Limits: None known 000 ft. +) D.-Width: 38 miles E.-Length: 215 miles 51. Singapore Strait A.-Lat. 1 ITN Long 'E North-Singapore and Malaya South-Sumatra, Indonesia C.-Draft Limits: About 65 ft. D.-Width: 2.5 miles E.-Length: 48 miles 52. Skagerrak A.-Lat. 58 OD'N Long. 10 OD'E Northeast-Sweden South-Denmark Northwest-Norway C.-Draft Limits: None known 000 ft. +) D.-Width: 61 miles E.-Length: 100 miles 53. St. Georges Channel A.-Lat. 52 OD'N Long. 6 OO'W East-Wales West-Ireland C.-Draft Limits: None known 000 ft. +) D.-Width: 35 miles E.-Length: 40 miles 54. St. Lucia Channel A.-Lat. 14 1D'N Long 'W North-Martinique Island South-St. Lucia Island C.-Draft Limits: None known 000 ft. +) D.-Width: 17 miles E.-Length: 15 miles 55. Sunda Strait A.-Lat. 6 05'N Long / E North-Sumatra, Indonesia East-Java, Indonesia C.-Draft Limits: About 40 ft. draft. Many shoals poorly marked or unmarked. Sparse soundings. D.-Width: 3.5 miles E.-Length: 48 miles 56. Tablas Strait A.-Lat. 13 OD'N Long / E Various Philippine Islands C.-Draft Limits: Quite narrow at Northwest end. Draft-none known. D.-Width: 4 miles E.-Length: 110 miles 57. Torres Strait A.-Lat. 10 OO'S Long / E 66

75 North-Papua (New Guinea) South-Australia C.-Draft Limits: About 40 ft. Numerous shoals and reefs. D.-Width: 2.2 miles E.- Length: 100 miles 58. Tsugaru Strait A.- Lat 'N Long 'E B.- Bounded By: North-Hokkaido South- Honshu C.-Draft Limits : None known ODD ft. +) D.-Width: 10 miles E.-Length: 69 miles 59. Unimak Pass A.-Lat 'N Long. 165 lo'w B.- Bounded By: Aleutian Islands, Alaska, U.S.A. C.-Draft Limits: None known 000 ft. +) D.-Width: 10 miles E.-Length: 28 miles 60. Vitiaz Strait A.-Lat. 6 OD'S Long 'E B.-Bounded By : Northeast-New Britain, Bismarck Arch. South and West-New Guinea C.-Draft Limits: None known. Narrow. D.-Width: 20 miles E.- Length: 188 miles 61. Windward Passage A.- Lat. 20 OO'N Long 'W North-Great Inagua Island East-Republic of Haiti Southwest-Jamaica Island West-Cuba C.-Draft Limits: None known ODD ft. +) D.-Width: 45 miles E.-Length: 50 miles 62. Yucatan Channel A.- Lat 'N Long. 86 OO'W East-Cuba West-Mexico C.-Draft Limits: None known 000 ft. +) D.-Width: 103 miles E.-Length: 62 miles 67

76 Alternate Routes and Variation of Distances 1. Persian Gulf (Mina Al Ahmadi -Kuwait) to U.S. West Coast (San Francisco) (a) Via Singapore Str. m hm._h n_ m 11,177 (b) Via Sunda Str. mm mh m 11,702 (c) Via Lombok Str. mhh_ m nnh 11,916 (d) Via Ombai-Wetar Str. m. 'm 12,100 (e) Via Torres Str. hhhhnm mn_m 12,553 (f) Via Bass Str. h_mm_m mm m._ 13,784 (g) Via C. of Good Hope & Magellan Str. hhnhhn m h_n h 15,547 (h) Via C. of Good Hope & C. Horn _ m h m_m m h m _ 15, Persian Gulf (Mina Al Ahmadi -Kuwait) to U.S. Atlantic Coast (Philadelphia) (a) Via C. of Good Hope hm h 11,994 (b) Via Bass Str. & Magellan Str. h 19,543 (c) Via Bass Str. & C. Horn _hh h 19,607 (d) Via Torres Str. & Magellan Str. nn m m m 20A34 3. Persian Gulf (Mina Al Ahmadi -Kuwait) to U.S. Gulf Coast (Port Arthur) (a) Via C. of Good Hope & Old Bahama Ch. m h _ m.m 12,558 (b) Via C. of Good Hope & Providence Ch. mm h hm_.m 12,660 (c) Via C. of Good Hope & Yucatan Ch. _mhm m h_m._h 12,621 (d) Via Bass Str. & Magellan Str. h 20,075 (e) Via Bass Str. & C. Horn m m 20,139 (f) Via Torres Str. & Magellan Str. m mh_mh_mh_nnh 20,966 The following transportation cost estimates are based on the following assumptions: 1. Vessel Size: 250,000 DWT 2. Loaded Draft: 65 feet 3. Ballast Draft: 40 feet 4. Loading Port: Persian Gulf, Mina Al Ahmadi-Kuwait 5. Discharge Ports: a) U.S. East Coast-Philadelphia, Pennsylvania b) U.S. Gulf Coast-Port Arthur, Texas c) U.S. West Coast-San Francisco, California 6. Trade Route Assumptions: a) Vessels permitted to freely pass Cape of Good Hope b) Vessels not permitted to pass Cape of Good Hope c) Vessels required to use Cape Horn and/or Torres and Magellan Straits d) Vessels permitted to use Straits of Ma1acca e) Vessels not permitted to use Straits of Malacca and alternate options 7. Vessels permitted to transit the Suez Canal (when and if reopened) in ballast condition. 8. Vessels permitted to transit the Suez Canal (when and if reopened and if dredged to sufficient depth) in loaded condition. The figures provided are based on the prevailing operating cost existing December 1972 and the trade/ alternate trade routes are provided to show economic impact in the event the concept of "mere transit" were not to prevail and alternate, less desirable trade routes became a reality. While the combinations of trade/ alternate trade routes could in some instances become quite extensive, the following examples are intended to depict the major marine transportation considerations realtive to the U.S. petroleum supply future. 68

77 r=y:j7 eal 1"'7fiF" "'\: \1 t... "'V.,...-. NORTH 1 ASIA )U~ I PACIFIC V\.. ASIA -. I Q\. NORTH 1\( I ta )\~ 160 '" I 1'1) 'l,)~ I ~ J.,!"-~I~~IVIIL J r ~ > r< 0 INDIAN :woi. ~) ", I' /7,... 1 )1\hi" TH I n_ooo.-. ) OCEAN... \ :V/ t I I I I I I ' ANTARCTICA I ':> I I on'., I 11'V I-\I"II-\MLIILI-\ ' CJ) <.0 Alternate Tanker Routes: Persian Gulf-United States.